Nigeria’s domestic crude supply system is coming under renewed scrutiny after Dangote Refinery said oil routed through international oil companies and third parties is raising its feedstock costs, with industry estimates putting the additional burden at as much as $4 per barrel.
The complaint exposes a deeper problem in Nigeria’s effort to supply its growing domestic refining industry, crude may be produced locally and formally offered to refiners, but the route through which some barrels are sold can make them more expensive than alternative supplies available on the international market.
Dangote Petroleum Refinery has previously said that intermediaries can add between $3 and $4 per barrel to crude acquisition costs. The Nigerian government is now considering changes to its crude allocation and pricing system to improve direct access for domestic refiners.
The refinery raised similar concerns in a Tuesday statement by Devakumar Edwin, Group Vice President, Oil & Gas and Fertiliser at Dangote Industries Limited, responding to recent figures from the Nigerian Upstream Petroleum Regulatory Commission.
Edwin said a substantial share of crude allocated to the refinery under Nigeria’s Domestic Crude Supply Obligation has had to be obtained through international oil companies and third parties rather than directly from upstream producers.
