With global refineries idle, we have become Nigeria’s energy lifeline – Dangote Refinery

Dangote Petroleum Refinery & Petrochemicals has reassured Nigerians of its continued commitment to serve as a stabilizing force amid recent shocks in the international oil market.

Conflict in the Middle East has led to the closure of some refineries and reduced refinery production around the world.

This is leading to a global shortage of petroleum products. China has already banned the export of petrol and diesel.

In a statement on Thursday, the Company said it will ensure Nigeria is insulated from these supply shocks by prioritizing supply to the domestic market. underlining that “this is one of the many advantages of national refining”.

The conflict has pushed global crude and transportation prices sharply higher, with benchmark Brent prices rising about 26% in a short period to above $84.0 a barrel.

“In response, the refinery implemented a measured adjustment of N100 per liter in the ex-depot price of Premium Motor Spirit, representing an increase of approximately 12%.

“The refinery has absorbed 20% of the cost increase, for now, to cushion the domestic market, although it continues to source crude oil at prices prevailing in the international market, whether purchased locally or from foreign suppliers.

“It is worth noting that Nigerian crude oil is more expensive than the Brent benchmark price by $3 to $6 per barrel. After adding a freight rate of $3.50 per barrel, crude oil will land in our tanks between $88 and $91 per barrel. For context, crude oil was landing in our tanks at around $68 per barrel when our ex-depot price was N774/litre.

“Furthermore, while we receive approximately five cargoes per month from the NNPC which we pay in Naira, these cargoes are priced at International Market Prices + Premium and fall short of the 13 cargoes we need to support sales in Nigeria. We therefore end up sourcing foreign exchange at open market rates to pay for crude oil cargoes purchased from local and international traders,” the Company’s management explained.

The refinery noted that high crude costs compounded by the country’s upstream producers have failed to supply crude oil to the refinery as required by the PIA, forcing it to source a substantial portion through international traders who charge an additional premium.

“As a private enterprise operating in a deregulated environment, Dangote Oil Refinery has remained responsive and has made significant sacrifices by aligning prices with market realities to ensure sustainability, particularly as it purchases all of its crude oil at prevailing international market prices, both locally and from foreign suppliers. Selling below cost would undermine its ability to source crude oil, sustain production and ensure uninterrupted supply to Nigerians.

“Despite these pressures, local refining at this scale continues to reduce exposure to international supply disruptions, moderate foreign exchange demand and protect the country from severe shortages during times of global instability.

“The refinery is also accelerating the deployment of trucks powered by compressed natural gas to cushion the impact of global shocks, improve nationwide distribution efficiency, reduce logistics costs and improve delivery times across the downstream sector. The deployment is expected to begin this month,” the 650,000 barrel-per-day refinery further explained. .

The Company said it remains committed to transparency, operational excellence and the long-term goal of ensuring sustainable energy security and stability for Nigeria at an affordable cost.