By Mary Izuaka

 

Dangote Petroleum Refinery and Petrochemicals has faulted recent data released by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) which indicated that the refinery rejected 15.5 million barrels of crude oil offered by local producers in the second quarter of 2026.

The company, in a statement on Tuesday, said while it remains committed to sourcing Nigerian crude and supporting the Domestic Crude Supply Obligation (DCSO) framework, supply must be available in adequate volumes and offered on commercially competitive terms to ensure the sustainability of domestic refining and the supply of affordable petroleum products to Nigerians.

On Monday the NUPRC said the Dangote Refinery required 63 million barrels of crude in Q2 2026 but the producers offered higher volumes of 68.1 million barrels.

The commission said the 68.1 million barrels offered to the Dangote Refinery by producers represents 98 per cent of all offered volumes.

Eventually, the NUPRC said 52.6 million barrels were accepted by the Dangote refinery, noting that this implies that the refinery only accepted 78 per cent of what it was offered.

Issue is viability, not volume offered

On Tuesday, the Group Vice President, Oil & Gas and Fertiliser, Dangote Industries Limited, Devakumar Edwin, said the central issue is not the volume of crude nominally offered under the DCSO arrangement, but the quantity that is genuinely available for purchase under commercially viable conditions.

According to him, the refinery has consistently raised concerns about inadequate availability of domestic crude and, more recently, has encountered situations where crude is offered at prices that are significantly above prevailing market benchmarks.

“Our position is straightforward. We are ready and willing to purchase Nigerian crude oil, provided it is available in sufficient volumes and at competitive market prices. Like every refinery, we must procure crude that supports sustainable operations and value creation.

“This is essential to maintaining the economics of domestic refining and enabling us to deliver petroleum products to Nigerians at affordable and competitive prices,” Mr Edwin said.

Intermediaries blamed for cost surge

Mr Edwin explained that since the commencement of the DCSO framework, the refinery has faced significant challenges in securing crude supplies directly from domestic producers.

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As a result, he said a substantial portion of the crude allocated under the arrangement has had to be sourced through International Oil Companies (IOCs) and third parties rather than directly from Nigerian upstream producers.

This process, he said, often introduces additional premiums and transaction costs that can drive crude prices above internationally recognised benchmarks published by agencies such as Platts and Argus.

In many cases, he said, this has made domestically sourced crude less competitive than alternative supplies available on the international market.

“When additional layers of intermediaries introduce premiums, the cost of crude acquisition increases significantly, affecting the overall economics of domestic refining. Ultimately, higher crude costs translate into higher costs of refined petroleum products for the local market,” he added.