Dangote Industries Ltd. has praised the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) for its efforts to secure crude oil supply from International Oil Companies (IOCs).
The commendation comes amid ongoing difficulties in the domestic crude supply chain, as revealed by the company’s Vice President, Devakumar Edwin, in a statement on Wednesday.
In a statement on Wednesday, Devakumar Edwin commended said that NUPRC should also be commended for publishing the Domestic Crude Supply Obligation (DCSO) guidelines to enshrine transparency in the oil industry.
“If the Domestic Crude Supply Obligation (DCSO) guidelines are diligently implemented, this will ensure that we deal directly with the companies producing the crude oil in Nigeria as stipulated by the PIA.”
Despite these positive steps, Edwin revealed ongoing difficulties in procuring crude from IOCs. He cited instances where trading arms of IOCs offered crude at premiums of $2 to $4 per barrel above NUPRC’s official price. In a specific example, Edwin detailed a April purchase of Bonga crude at $96.23 per barrel, significantly higher than comparable international grades.
“As an example, we paid $96.23 per barrel for a cargo of Bonga crude grade in April (excluding transport).
The pricing discrepancies have prompted Dangote to escalate the issue to NUPRC. Edwin urged the commission to “take a second look at the issue of pricing,” highlighting the importance of market liquidity for a truly willing seller-willing buyer dynamic.
These revelations come in the wake of comments by NUPRC CEO Gbenga Komolafe, who recently stated it was “erroneous” to claim IOCs were refusing to supply crude to domestic refiners. Edwin, while acknowledging NUPRC’s support, suggested Komolafe’s statement might have been misinterpreted, confirming that IOCs have indeed been “difficult to deal with directly.”
The Dangote executive also pointed out that, aside from the Nigerian National Petroleum Corporation Ltd. (NNPCL), the company has only managed to purchase crude directly from one other local producer. Other producers often redirect Dangote to their international trading arms, which act as middlemen, potentially inflating costs.
To address these issues, Edwin proposed that the DCSO should specify volume obligations per producer and implement a transparent pricing formula. He emphasized, “The fact that the domestic crude supply obligation as defined in the PIA has gaps is no reason for wisdom not to prevail.”
