The Independent Petroleum Marketers Association of Nigeria (IPMAN) has said the resort of the 650,000 barrel-per-day Dangote Refinery to the United States for crude importation will increase the prices of petroleum products in the country. IPMAN’s National Public Relations Officer, Mr. Ukadike Chinedu, in an interview with Sunday Telegraph over the weekend, decried that Nigerians were currently suffering from sky- rocketed fuel pump price as a result of the unilateral removal of fuel subsidy by President Bola Tinubu during his inaugural speech on May 29, 2023. According to him, hopes were high that with local refining, prices of petroleum products would be reduced. He, however, said that it was worrisome for Dangote to buy crude from the US. He noted that with the crash of the Naira and the high cost of freight and other associated charges involved in international shipping and business, Nigeria could witness more increases in the prices of petroleum products. Chinedu said: “It will increase the price of petroleum products.
The problem we are facing is policy making and implementation. What is the essence of building Dangote refinery and we still go to the US to buy crude? It is very unfortunate and not good for us. It also means that we are not robbing Peter to pay Paul. The product is being exported from here to other countries. Still, we are now going to US to import crude when Nigeria is an oil producing state. It is very ridiculous. I believe that in the earliest distance, Nige- ria should rethink and talk about it.” Bloomberg had reported that Dangote Refinery was planning to import crude oil from the United States in the forthcoming months. Blomberg, quoting traders familiar with the matter, had said that Trafigura Group has sold 2 million barrels of WTI Midland to the Dangote refinery for delivery by the end of February, which will mark the first time the refinery bought non-Nigerian crude.
Reacting to the development in an interview with Sunday Telegraph, Group Head, Corporate Communications at Dangote Group, Anthony Chiejina, said the refinery resorted to crude oil importation from the US because there was not enough crude for its purpose in the country. He, however, said resorting to the US for crude imports may not increase prices of petroleum products, as according to him, prices will be determined by the inter- national market.
Chiejina said: “If you have this, why should somebody go elsewhere and pick? It is NNPC Ltd you should be asking. “I do not know about that. Even if you are buying it from Nigerian National Petroleum Company Limited (NNPC Ltd), is it going to be cheaper? It is international market price determined.”
The Executive Secretary, Major Energies Marketers Association of Nigeria (MEMAN) formerly Major Oil Marketers Association of Nigeria (MOMAN), Mr. Clement Isong, opined that prices of petroleum products may not go up in Nigeria because Dangote bought crude from the US. According to him, the choice of US crude may be informed by technical consideration and commercial competitiveness. Isong said: “Dangote has done their mathematics and based on what is currently available in the mar- ket and the grade of crude that they are looking for, in order to blend the various crude blends in their facility, that this is the best deal they could have gotten in the market at this point in time even with the transportation calculated. Nigeria’s crude is Bonny light. It is not cheaper. There is a blend of crude that they use depending on what they want to produce. I am 100 percent sure that this is the best price they could have gotten. We need to trust them. “In any case, we must remember that it is a refinery.
There are two ways you can work in a refinery. Somebody can buy, refine and sell, depending on what the person wants. Refinery is just a tool for refining. Everything that goes into and comes out of the refinery does not neces- sarily mean that it must be- long to Dangote. “The refinery belongs to him and we do not have that information. You can rest assured from his history that they have done the best possible pricing of the prod- uct and that the price is very competitive from where it could have bought it from, based on the kind of grade that it uses.” He added: “I would not worry about that. Remember that a lot of crude in Nigeria is committed. So, the commission is investing in trying to make sure that everybody gets as much crude as it needs from the different refineries that are operating in Nigeria. We are still in the process of finding our feet with respect to the supply chain. I believe that it becomes more efficient as time goes on.
“Because of the grade you are looking for, the grade may not be what they want- ed. You know we have light sweet; they may be looking for a higher grade. We do not know. “Secondly, even if NNPC Ltd could supply him, if the one he has gone to buy is cheaper, if he buys in dollars, you do not know. So, you can not presume any- thing. You need to ask them if you want to understand why they went to America. I will not be surprised if it is cheaper. There are technical and commercial reasons that have caused them to go and buy from the US. I have no doubt about that. “It may not make the price go up. Whatever will make the price jump up, those conditions are already in place.” There are also reports that Nigeria had pledged a total of 164.25 million barrels of crude oil — at 90,000 barrels per day — starting from 2024 to repay a loan through Project Gazelle Funding Ltd, a Special Purpose Vehicle (SPV) incorporated in the Bahamas for the PxF.
The loan is o $3.3 billion “pre-export finance facility” (PxF) facilitated by the Nigerian National Petroleum Company (NNPC) Ltd and arranged by Afrexim Bank. The NNPC Ltd also pledged 38.58 per cent of five years’ worth of tax and royalty oil to secure the loan. Nigeria has been consistently unable to meet its crude quota by the Organisation of Petroleum Exporting Countries (OPEC). Nigeria’s daily crude oil production jumped to 1.4 million barrels per day (mbpd) in December 2023 from 1.319mbpd in November, using secondary sources, while, using direct communication, Nigeria production from 1.250mbpd in November to 1.335mbpd in December. Sources told Bloomberg that part of the current oil production cuts only started at the beginning of January, adding that OPEC+ will need more time to review and assess what impact the output reduction has had on market balances.
Nigeria had been restricted to 1.5 million barrels per day target in 2024 during the 36th OPEC and non-OPEC Ministerial Meeting (ONOMM), held via videoconference, on November 30, 2023. The development was precipitated to a meeting in June where OPEC+ agreed a complex deal that revised production targets for several members. The oil cartel had contracted three consultancies – IHS, Rystad Energy and Wood Mackenzie – to verify production figures for Nigeria, Angola and Congo. As a result of the reports of the consultants, it gave Nigeria a 2024 target of 1.5 million barrels per day (bpd), Congo a target of 277,000 bpd and Angola one of 1.11 million bpd, who by then had not exited OPEC. In June 2023, it had been agreed, pending the assessments by the consultancies, that Nigeria could produce Nigeria 1.38 mbpd and possibly as much as 1.58 million bpd but Nigeria had not met previous quotas.
Dangote Petroleum Refinery had before commencement of operation received six crude shipments. On January 9, it received the sixth one million barrels of crude oil. It disclosed that the product was supplied by the Nigeria National Petroleum Company (NNPC) Limited, and got discharged at the single point mooring (SPM-C2) of the Dangote offshore oil terminal (DOOT). According to the state- ment, the fresh one million Agbami barrels of crude via MT ALMI SUN is the last cargo to complete the initial scheduled six million barrels consignment to be delivered to the Dangote facility.
