Dangote Refinery Recommits to Nigeria’s Energy Stability Amid Global Oil Market Volatility

Peter Uzoho

Dangote Petroleum Refinery and Petrochemicals has reassured Nigerians of its unwavering commitment to serving as a stabilising force in the supply of petroleum products amid current shocks in the international oil market fuelled by the ongoing United States and Israeli war against Iran.

The conflict in the Middle East had led to the shutdown of some refineries and cut in refinery production across the world.

The conflict is feared to cause global scarcity of petroleum products, as China has banned export of gasoline (petrol) and diesel.

In a statement issued yesterday, Dangote Refinery pledged to ensure that Nigeria was insulated from the supply shocks by prioritising supply to the domestic market, describing the intervention as one of the many benefits of domestic refining

The conflict had driven global crude and freight prices sharply higher, with benchmark Brent prices rising by about 26 per cent within a short period to above $84.0 per barrel.

In response, the refinery said it implemented a measured adjustment of N100 per litre in its ex-depot price of Premium Motor Spirit (PMS), commonly known as petrol, representing an increase of about 12 per cent.

The refinery said it had absorbed 20 per cent of the cost escalation, for now, to cushion the domestic market, adding that this was despite continuing to source crude at prevailing international market prices, whether purchased locally or from foreign suppliers.

Dangote Refinery argued that Nigerian crude oil was more expensive than the Brent benchmark price by $3 to $6 per barrel.

It stated that after adding freight of $3.50 per barrel, crude oil would be landing in its tanks between $88 and $91 per barrel.

For context, the company maintained that crude oil was landing its tanks at $68 per barrel when its ex-depot price was N774/litre.

The refinery stated, “Furthermore, while we receive about five cargoes a month from NNPC which we pay for in Naira, these cargoes are priced at international market prices + Premium and fall short of the 13 cargoes which we require to support sales into Nigeria.

“We, therefore, end up procuring foreign exchange at open market rates to pay for crude cargoes purchased from local and international traders.

“The high crude cost is compounded by the fact that Nigeria upstream producers have failed to supply crude oil to the refinery as required under the Petroleum Industry Act (PIA), forcing us to source a substantial portion through international traders who charge an additional premium.”

The company stated, “As a private enterprise operating in a deregulated environment, Dangote Petroleum Refinery has remained responsive and has made significant sacrifices by aligning pricing with market realities to ensure sustainability, particularly as it sources all its crude at prevailing international market prices, whether locally or from foreign suppliers.

“Selling below cost would undermine its ability to procure crude, sustain production and guarantee uninterrupted supply to Nigerians.”

Despite the pressures, Dangote Refinery stated that local refining continued to reduce exposure to international supply disruptions, moderate foreign exchange demand, and protect the country from severe shortages during periods of global instability.

The refinery said it was also accelerating deployment of Compressed Natural Gas-powered trucks to cushion the effect of global shocks, enhance nationwide distribution efficiency, reduce logistics costs and improve delivery timelines across the downstream sector.

It stated that the rollout was scheduled to commence this month.

“We remain committed to transparency, operational excellence and the long-term objective of securing sustainable energy security and stability for Nigeria at an affordable cost,” the Aliko Dangote-owned firm stated.