Dangote laments IOCs’ unwillingness to sell crude directly to refinery

Dangote Refinery has expressed concern over the unwillingness of international oil companies operating in Nigeria to sell crude to the refinery, stating that their preference for selling crude to traders forces it to repurchase at higher costs, with broader implications for the economy. President/Chief Executive of Dangote Industries Limited, Aliko Dangote, disclosed this while hosting […]

Dangote Refinery has expressed concern over the unwillingness of international oil companies operating in Nigeria to sell crude to the refinery, stating that their preference for selling crude to traders forces it to repurchase at higher costs, with broader implications for the economy.

President/Chief Executive of Dangote Industries Limited, Aliko Dangote, disclosed this while hosting the Deputy Secretary-General of the United Nations, Amina Mohammed, at the company’s industrial complex in Ibeju-Lekki, Lagos.

The refinery, he said, continues to bridge the gap of crude supply through imports from the United States and other African producers despite improvement of supply through the naira-for-crude initiative.

In a note on Tuesday, Dangote commended the Nigerian National Petroleum Company Limited (NNPCL) for increasing crude deliveries to the refinery in March, noting that volumes rose to 10 cargoes—six supplied in naira and four in dollars—to support domestic fuel availability.

“Last month, they gave us six cargoes for naira and four cargoes for dollars,” he said.

He added that the refinery has shipped about 17 cargoes of petrol to African countries to cushion the impact of the crisis, leveraging its 650,000 barrels per day capacity to stabilise supply across multiple regions.

“What I can do is assure Nigerians … and most of West Africa, Central Africa, and East Africa, we have the capacity to supply them,” Dangote said.

Dangote added that the refinery is seeking increased access to domestically priced crude under local currency arrangements as part of efforts to moderate fuel costs and enhance long-term energy and food security across the continent.

Daily Trust reports that some stakeholders have made a case for a separate arrangement for Dangote to get crude supply at a controlled price in order to reduce the product cost locally.

A renowned economist, Bismark Rewane recently advocated for a refinery-based subsidy model that channels benefits directly to consumers.

Rewane explained that the proposed model would involve the government supplying crude oil to domestic refiners at a controlled price, while ensuring that refined petroleum products are sold to consumers at lower rates.

“Nigeria will actually sell oil to the refiners at a particular price and insist that the refiners bring down their price and pay the difference,” he noted.

Why IOCs can’t sell directly to Dangote – Analyst

But an economist and oil and gas industry analyst, Dr. Marcel Okeke told Daily Trust that the IOCs in Nigeria are subsidiaries of the global companies and with the existing product sharing arrangement and the advanced crude oil sale by the Nigerian government, it becomes difficult to cater for the local refiners.

He said the crude oil market is an open market, determined by market forces.

Okeke said, “For instance if the federal government has sold what they should get for example upfront like you know some portions of it were used to obtain loan, when the federal government takes what should be their share and the IOCs take what should be their share, who should dictate to them who they should sell to? After all they (IOCs) are a subsidiary of a global concern somewhere.

“If you call something like Shell, Shell in Nigeria is part of a global Shell somewhere, the headquarters.

So they will tell them, bring our own share, let us sell in the international market. And so because the government has taken its own and which he has sold upfront, or used upfront or whatever, what other power does it have?  I think that is what is playing out. Okay?

“They cannot control what they do not own. And moreover, you know, this liberalization, whatever. So if it’s been liberalized truly, who should dictate to who? Why? So it’s an open market. It’s an open market. And where it is an open market, it is driven by demand and supply.

“So people should sell where they should get the best price and the government cannot compel them…if it is possible the President is the Minister of Petroleum Resources, let him issue a presidential order in that regard. But he cannot. That’s the way I look at it.”

Meanwhile, Dangote said the company has intensified shipments of fertiliser to support agricultural productivity and ease supply constraints.

He said: “The challenges are many. One is urea, which is fertiliser that we have. I think in the last couple of days we’ve been loading to mostly African countries, which we were not doing before,” he said.

“And then now it’s to do with petroleum products, which we are now sending mainly to African countries,” he added.

Dangote added that the refinery is seeking increased access to domestically priced crude under local currency arrangements as part of efforts to moderate fuel costs and enhance long-term energy and food security across the continent.

Speaking, the Deputy Secretary-General of the United Nations, Amina Mohammed, has underscored the strategic importance of Dangote Industries Limited -particularly Dangote Fertiliser Limited—in addressing Africa’s mounting food security challenges, while calling for stronger global partnerships to scale its impact.

She said the United Nations would prioritise amplifying scalable solutions capable of mitigating the continent’s food crisis, describing Dangote’s integrated industrial model as a critical pathway.

She added: “I think the UN’s job here is to amplify and to put visibility on the possibilities of mitigating a food security crisis, and this is one of them,” she said. “I hope that when we go back, we can continue to engage partners and countries that should collaborate with Dangote Industries.”