Middle-East war: Dangote assures Nigeria of cushioning global energy shocks
...absorbs 20% price hike, set to rollout new CNG trucks
As the widening conflict in the Middle East triggers a wave of refinery shutdowns and production cuts across the globe, the Dangote Petroleum Refinery and Petrochemicals has assured Nigerians of insulating the Nigerian market from severe supply shocks.
Reaffirming its role as Nigeria’s primary energy lifeline, the Refinery pledged to prioritize domestic delivery.
The Middle East war has occasioned geopolitical instability which is disrupting the international supply chain, leading major producers like China to ban the export of gasoline and diesel to protect their own interests.
The regional warfare has sent crude oil and freight prices soaring, with the benchmark Brent price surging over 26% to exceed $84 per barrel.
Despite these mounting pressures, the refinery has implemented a controlled adjustment of N100 per litre to its ex-depot price for Premium Motor Spirit, an increase of roughly 12%.
By absorbing approximately 20% of the recent cost escalation, the facility is currently cushioning the domestic market from the full impact of international price hikes.
This financial burden is compounded by the fact that Nigerian crude remains priced at a significant premium of $3 to $6 above the Brent benchmark, resulting in a landed cost of nearly $91 per barrel, a sharp rise from the $68 per barrel recorded when ex-depot prices were at N774 per litre.
Operating within a deregulated environment, the refinery faces additional hurdles as local upstream producers have struggled to meet the crude supply mandates outlined in the Petroleum Industry Act.
This shortfall forces the refinery to source a substantial portion of its feedstock through international traders at additional premiums, often requiring foreign exchange at open market rates to bridge the gap left by the limited Naira-denominated cargoes provided by the NNPC.
While selling below cost would threaten the long-term sustainability of the enterprise, the refinery continues to align its pricing with market realities to ensure that production remains uninterrupted and that Nigeria avoids the debilitating fuel shortages currently threatening other nations.
To further mitigate the impact of the global energy crisis on the Nigerian public, the refinery is accelerating the deployment of a new fleet of Compressed Natural Gas-powered trucks.
This logistics initiative, set to commence this month, aims to reduce distribution costs and improve delivery timelines across the country, providing a cleaner and more cost-effective alternative to traditional diesel transport.
By integrating these domestic resources, the refinery aims to strengthen Nigeria’s energy security and maintain a degree of price stability even as the international oil market remains ensnared in conflict.