• Lack of supply to Dangote shameful, says FG, minister blames low production
The failure to supply crude oil to domestic refineries, including the multi-billion dollar Dangote Refinery, has stalled the production of refined petroleum products at the facilities.
This is also as the 650,000 barrels per day Dangote refinery in Lagos missed the October production projection it had earlier set.
The October production target miss made it the second time in 2023 that Dangote Refinery would raise hopes of Africa, especially Nigeria, of a possible end to petrol importation. However, the failure to begin production means that Nigeria will continue to rely on fuel importation.
It was gathered on Wednesday that amid Nigeria’s continued imports of refined petroleum products, its domestic refineries that would have helped refine the commodities were being starved of crude oil.
About five more modular refineries are ready to commence the production of refined petroleum products but cannot produce the commodities because of the unavailability of crude oil, according to industry sources.
Also, industry sources stated that the Dangote Refinery in Lekki, Lagos, had yet to receive the required volumes of crude oil needed to produce refined products.
On September 20, 2023, The PUNCH reported that the Dangote Petroleum Refinery was importing crude oil and expected its first cargo in about two weeks, according to the Executive Director, Dangote Group, Devakumar Edwin.
The report stated that though the Nigerian National Petroleum Company Limited trades crude oil on behalf of Nigeria, in an interview with S&P Global Commodity Insights at the time, Edwin revealed that the NNPCL had committed its crude to other entities.
The Dangote refinery boss did not disclose the other entities receiving the oil company’s crude, but the NNPCL had earlier disclosed in August that it had entered into a $3bn crude oil-for-loan deal with African Export-Import Bank.
The deal allowed the company to pledge future oil production to the bank as repayments for the loan.
Also, Edwin pointed out that the importation of crude by the Dangote refinery was temporary, as the firm would receive supply from NNPCL from November.
Edwin went ahead to state that the firm would begin the production of up to 370,000 barrels per day of crude that would give rise to Automotive Gas Oil, popularly called diesel, and jet fuel in October 2023.
For petrol, the Dangote Group’s boss said the plant would produce it by November 30, 2023.
Efforts to get the reaction of the Dangote refinery were unsuccessful, as two spokespersons for the firm did not answer calls to their mobile phones. They also did not respond to text messages sent to them on the matter.
Although the Federal Government blamed the development on Nigeria’s low oil output, operators of domestic refineries raised concerns about the lack of feedstock (crude) for their refineries and how this was stalling the take-off of these plants.
Operators of the modular refineries confirmed on Wednesday that International Oil Companies preferred exporting the commodity to earn dollars, to the detriment of domestic refiners.
The NUPRC had on Saturday announced that more domestic refineries had issued notice to commence the production of refined petroleum products.
It also announced its readiness to enforce domestic crude oil supply obligations that would ensure the availability of crude to indigenous refiners.
Senior officials from the Federal Ministry of Petroleum Resources, the NUPRC, and the Crude Oil Refinery Owners Association of Nigeria further confirmed that the number of local refineries set to commence production was about five.
Modular refinery operators under the aegis of CORAN revealed that feedstock supply had remained a severe bottleneck.
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