Dangote Refinery Receives Additional Crude Oil Supply Amidst Price Reduction

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The Dangote Petroleum Refinery has received additional crude oil supply from the Federal Government, as part of efforts to promote local refining. This development comes amidst a fresh price reduction at the refinery loading gantry from N825 per litre to N815 per litre.

Dealers confirmed the development, stating that the competition in the downstream oil sector had become fierce. They noted that the supply of crude oil to Dangote refinery highlights the crucial role of supporting local refining efforts and contributes significantly to domestic refineries’ operations, boosting their production capacities.

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“All cargoes have been released to Dangote Refinery, and the vessels have sailed to the refinery,” a highly-placed source at the Nigerian National Petroleum Company Limited (NNPCL) stated in a chat. The source spoke in confidence due to the lack of authorization to speak with the media.

Another source noted that the cargoes, originally scheduled for delivery last week, were delayed and remained at sea due to uncertainties surrounding the naira-for-crude deal at that time. Officials of the refinery had yet to respond to enquiries on the matter

This latest development follows a meeting of the Technical Sub-Committee on the Naira-for-Crude Policy, where members gathered to evaluate recent developments, address emerging issues, and reaffirm their commitment to the continued success and implementation of the policy framework.

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A major marketer explained that the stiff competition among stakeholders in the downstream oil sector is the primary reason for the ongoing decline in petrol prices. “Prices of gasoline (petrol) have continued to fall and may soon go below N800 per litre. The big question is why? Many suggestions are being made as to the reason behind this phenomenon. Some suggest it is purely local refining capacity. Others suggest it’s the naira-for-crude initiative. Whatever the cause, it is a welcome relief to consumers and will simultaneously help ease the inflationary pressures in the economy.”

The marketer further stated, “The overriding factor from my perspective is that the falling prices are a direct consequence of competition enabled by the deregulation or liberalisation of the downstream. We had often made this point in arguing in favour of this policy. Unfortunately, many stakeholders, including labour, pushed back, allowing the country to almost go bankrupt before the policy was finally implemented.”

The marketer advised the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to “continue to monitor to ensure that only quality products are being imported and, at the same time, ensure that there is a balance between total consumption in the country, local production, and imports.

“Ultimately, local refining of our crude is good for us. However, there must be an incentive for local refiners to keep their prices at the barest profitable minimum through limited and controlled imports. Local refineries also always have the option of exporting excess production to earn dollars.”

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