Dangote Refinery: Domestic Crude Must Be Available, Commercially Viable

The Dangote Petroleum Refinery and Petrochemicals has said it remains committed to purchasing Nigerian crude oil, but stressed that domestic crude supplies must be available in sufficient volumes and at commercially competitive prices to sustain local refining and ensure affordable petroleum products.

The clarification followed recent reports citing data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), which indicated that the refinery rejected about 15.5 million barrels of crude oil offered by local producers in the second quarter of 2026.

The refinery, however, disputed the interpretation of the figures, saying the critical issue was not the volume of crude nominally offered under the Domestic Crude Supply Obligation (DCSO), but the quantity actually available for purchase under commercially viable conditions.

Group Vice President, Oil & Gas and Fertiliser, Dangote Industries Limited, Devakumar Edwin, said the refinery had consistently expressed concerns over inadequate domestic crude availability and, more recently, crude being offered at prices significantly above prevailing international 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,” Edwin said.

According to him, the refinery, like every other commercial refining operation, must procure crude at prices that support sustainable operations and value creation.

He said this was necessary to protect the economics of domestic refining and enable the company to supply petroleum products to Nigerians at competitive prices.

Edwin explained that since the implementation of the DCSO framework, the refinery had experienced considerable difficulties obtaining crude directly from domestic producers.

He said a substantial proportion of crude allocated under the arrangement had consequently been sourced through International Oil Companies (IOCs) and other third parties rather than directly from Nigerian upstream producers.

The company said the involvement of additional intermediaries often resulted in premiums and transaction costs that pushed the price of Nigerian crude above internationally recognised market benchmarks published by agencies such as Platts and Argus.

Such pricing, according to the refinery, could make domestic crude less competitive than alternative crude 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,” Edwin added.

The refinery said its concerns were not directed at the objective of the DCSO policy, which it strongly supports, but at some of the operational challenges surrounding its implementation.

Edwin also raised concerns about aspects of the Petroleum Industry Act (PIA) framework which, according to him, allow counterparties to withdraw from negotiations without a structured review process or adequate safeguards.

He argued that such uncertainties could undermine the effectiveness of the domestic crude supply system and frustrate the country's ambition to maximise local refining capacity.

The company further disclosed that, excluding cargoes supplied under NNPC term contracts, it had concluded negotiations for only a limited number of DCSO cargoes since the commencement of the arrangement.

In some instances, it alleged that crude cargoes earmarked for domestic refining had already been committed to other buyers before negotiations with the refinery began.

Dangote Refinery therefore called for greater transparency, improved market efficiency and commercially sustainable supply arrangements in the implementation of the domestic crude supply framework.

The company maintained that reliable access to Nigerian crude remains essential to maximising domestic refining capacity, strengthening energy security, reducing dependence on imported petroleum products and conserving the country's foreign exchange.

It added that a more efficient domestic crude supply system would also help Nigeria retain greater value within the economy and support the government's broader objective of developing a robust domestic petroleum refining industry.