Lagos, Nigeria – Africa’s largest oil refinery, Dangote, has accused the Nigerian government of failing to ensure adequate crude oil supply for local refiners. The company claims this is driving up its operational costs.
The $20 billion refinery, owned by billionaire Aliko Dangote, has been struggling to secure sufficient crude oil from domestic sources since its commencement of operations earlier this year. The company blames the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) for its inability to enforce the Domestic Crude Supply Obligation (DCSO), a law mandating oil producers to supply local refineries with a portion of their output.
Dangote Refinery alleges that while the NUPRC has been issuing directives, international oil companies have largely ignored them. This has forced the refinery to buy Nigerian crude from international traders at inflated prices, adding millions of dollars to its costs.
The refinery requires 325,000 barrels of crude oil per day but has only received about half that amount since it began operations. With September approaching, the company says it has only secured six out of the required 15 crude oil cargoes.
The NUPRC has countered the allegations, stating that some oil producers are facing operational challenges while others have prior commitments to oil traders who financed their drilling operations. The regulator insists that forcing these companies to increase supply to local refineries would breach existing contracts.
The DCSO, a provision of the 2021 Petroleum Industry Act, has faced implementation challenges due to Nigeria’s declining oil production and the cash-strapped Nigerian National Petroleum Corporation’s reliance on crude-backed loans.
