Oil Sector Crisis: Dangote Pledges to Prioritise Nigerian Market, Raises Petrol Gantry Price to N1,175

• Seeks more Nigerian crude to cushion fuel price gains 

• Petrol price may hit N2,000 per litre, say retailers

Emmanuel Addeh in Abuja

The Dangote Refinery said yesterday that it will continue to prioritise the Nigerian market in its fuel supply arrangements, but stated that it was seeking to buy more crude from Nigeria’s government to help soften the impact of rising fuel costs.

This came as the 650,000 barrels per day facility located in Lagos raised the gantry price of petrol to N1,175 per litre from N995, marking the third upward adjustment within a week, while that of diesel was increased to N1,620 per litre.

The refinery gets about five cargoes of crude a month from the state-run Nigerian National Petroleum Company Limited (NNPC Ltd), Dangote Refinery Chief Executive Officer, David Bird, said at a briefing in Lagos. The facility can “easily” take 13 or more cargoes, he added.

He stressed: “We’re designed around Nigerian crude, so we actively seek additional Nigerian crude cargoes,” noting “That’s the potential that we have been in discussions with the government about.”

Bloomberg reported that the US-Israel war on Iran has upended the oil market, sending crude prices soaring. Dangote Petroleum Refinery & Petrochemicals, which buys most of its feedstock from the market, said purchasing more oil from the government in local currency will help remove the costs paid to traders and avoid foreign-exchange expenses.

The Dangote Refinery stated that it will prioritise domestic supplies even though it paused sales of petrol and diesel pending the publication of higher rates for wholesalers, after raising prices of petrol by about 14 per cent last week.

Crude prices surged on Monday as more major Middle East producers cut output, including OPEC leader Saudi Arabia, with a standstill of tanker traffic through the vital Strait of Hormuz choking off supplies to the rest of the world. According to Bird, Dangote’s refinery is not immune to the changes in the global energy environment.

“In the space of a week, the crude oil price has doubled, freight rates have tripled, the insurance market in similar orders of magnitude,” he lamented.

The facility has the capacity to produce as much as 75 million litres of petrol per day, depending on domestic demand. “We can meet whatever the country requires,” Bird said.

Before the Dangote refinery opened in 2024, Nigeria had to import almost all its fuel and shortages were recurrent. “Nigeria will continue to enjoy supply security,”  Bird assured.

Besides, Bird said he could not guarantee there would be no further price increases, given that Dangote, a private enterprise, was “fully exposed to the international commodity market”. The global increase in crude oil prices, transport costs and insurance costs, he said , had weighed heavily on Dangote’s expenses.

He said any move to stabilise the market had to come from the government. “That is the role of the government if they want to intervene in the economy when it comes to the cost of energy,” he stressed.

Separately on its X handle, the refinery posted what it tagged: “8 key talking points from a Media Chat with the Managing Director/CEO, Dangote Petroleum Refinery, David Bird”.

“Dangote Refinery will continue to meet Nigeria’s fuel demand despite global supply disruptions and market volatility. Domestic refining gives Nigeria supply security, ensuring the country avoids fuel shortages and queues even when global markets are disrupted.

“Even under the crude-for-naira arrangement, Nigerian crude is purchased at international benchmark prices, meaning the refinery does not receive discounted crude. Import dependent countries are the worst hit as the global oil crisis escalates.

“Global oil markets are experiencing extreme volatility, with crude prices rising from the mid-$60 range to nearly $120 per barrel within a week. The refinery is fully exposed to international commodity markets, including crude oil prices, freight rates, insurance, and financing costs.

“Freight costs have surged dramatically, with tanker costs rising from about $800,000 to roughly $3.5 million per shipment in the current market environment. Dangote Refinery operates at its full nameplate capacity of about 650,000 barrels per day, with potential to increase production to around 700,000 barrels per day,” it explained.

The current turbulence in energy markets has been intensified by escalating hostilities involving the United States, Israel, and Iran, which have disrupted global commerce and energy flows.

Meanwhile, the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) yesterday warned that petrol prices in Nigeria could rise to as much as N2,000 per litre if the ongoing conflict in the Middle East continues.

In a statement, Billy Gillis-Harry, National President of PETROAN, said diesel prices could also climb to about N3,000 per litre if the situation persists. “PMS could rise close to N2,000 per litre while AGO may approach N3,000 per litre if the situation persists,” Gillis-Harry said.

He noted that with no clear end to the conflict, petroleum product prices in both international and domestic markets are likely to rise sharply in the coming days. He called on Bayo Ojulari, Group Chief Executive Officer of the NNPC to facilitate the immediate commencement of production at Nigeria’s local refineries, particularly the Area 5 plant at the Port Harcourt refinery and the Warri refinery.

He stressed that reviving Nigeria’s refineries for immediate domestic production is critical. According to him, local refining would reduce the country’s exposure to international market volatility, especially as Nigeria has abundant crude oil resources under the custody of the NNPC.

The PETROAN chief argued that government-owned refineries are less vulnerable to global supply disruptions compared to privately-owned refineries that rely on imported crude, warning that continued increases in fuel prices “would worsen inflation, cause job losses, deepen economic hardship, increase transportation costs, and raise prices of goods and services nationwide”.

However, he expressed confidence that the reform policies of President Bola Tinubu would eventually bring relief to Nigerians and stimulate economic growth nationwide.