The Dangote Petroleum Refinery has announced that it is now ready to supply Premium Motor Spirit (PMS), commonly referred to as petrol, following a successful product test run. According to reports from The Punch citing reliable sources, the 650,000-barrel capacity refinery is prepared to enter the market, with ongoing discussions between the government and the Dangote Group about the logistics of product distribution.
For the time being, only the Nigerian National Petroleum Company Limited (NNPCL) will be permitted to sell fuel produced by the Dangote refinery. Although the refinery had initially targeted a June launch for petrol production, complications arose due to crude oil shortages and a dispute with the Nigerian Midstream and Downstream Regulatory Authority (NMDRA), which accused the facility of producing substandard diesel.
The Federal Government intervened, mandating that crude oil supplies be paid for in local currency. Allegations have surfaced from Dangote and other local refineries claiming that international oil companies (IOCs) have been reluctant to sell crude to local refineries. Recently, the government announced that a crude oil supply agreement would commence in October.
The Dangote Group claimed that IOCs prefer selling crude oil through foreign agents, maintaining that the local price continues to rise due to these trading arms offering cargoes at prices ranging from $2 to $4 per barrel above the National Upstream Petroleum Regulatory Commission's (NUPRC) official pricing.
Tensions escalated as the Dangote refinery exchanged accusations with the NUPRC regarding the alleged provision of 29 million barrels of crude. The Dangote Group criticized the NUPRC for its failure to enforce Domestic Crude Supply Obligations, claiming insufficient local crude supply.
In response, the NUPRC countered, asserting that it had facilitated the supply of over 29 million barrels to the Dangote refinery between January and June 2024. They stated that domestic crude oil allocations were delivered using a monthly production curtailment platform.
However, the Dangote Group disputed this claim. Anthony Chiejina, spokesperson for the group, acknowledged the NUPRC's allocation of 29 million barrels but insisted that the refinery had yet to receive these shipments. He noted, "Aside from the term supply we bilaterally negotiated with NNPCL, we have only successfully purchased one cargo from a domestic producer; the remainder has come from international traders."
Chiejina emphasized that the refinery seeks a more straightforward approach, advocating for local refineries to purchase crude directly from domestic producers instead of relying on international intermediaries.