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Crude price hike: Dangote alleges IOCs frustrating refinery
Dangote claims that the NMDPRA has authorised operators to import tainted fuel.
Dangote Industries Limited's vice president of oil and gas, Devakumar Edwin, has accused international oil companies in Nigeria of conspiring to obstruct the new Dangote Oil Refinery and Petrochemicals' ability to survive.
Edwin claimed that by raising the price above the market, the IOCs were "deliberately and willfully frustrating" the refinery's attempts to purchase local oil. As a result, the refinery was forced to import crude from other nations, incurring significant expenses.
Speaking to reporters on Friday at a one-day training session hosted by the Dangote Group, Edwin further charged that the Nigerian Midstream and Downstream Petroleum Regulatory Authority had issued permits to marketers to import unclean refined petroleum without any discrimination.
Edwin claims that although the Federal Government of Nigeria granted 25 permits for the construction of refineries, only the Dangote Group fulfilled its commitment.
The vice president mentioned that the refinery had shipped more than 3.5 billion litres of aviation gasoline and diesel to Europe in the previous few months, even as he urged the government to provide support.
It was stated that around 90% of the fuel produced was exported.
"Out of the 25 licences granted by the Federal Government to construct refineries, only ours fulfilled our commitment. We essentially deserve all of the government's assistance. It is good to note that from the start of production, more than 3.5 billion litres, which represents 90 per cent of our production, have been exported. We are calling on the Federal Government and regulators to give us the necessary support to create jobs and prosperity for the nation,” Edwin stated.
In spite of the Nigerian Upstream Petroleum Regulatory Commission's best efforts, he continued, "the IOCs are deliberately and willfully frustrating our efforts to buy the local crude," adding that the refinery with a capacity of 650,000 tonnes was still in need of crude oil.
According to the Dangote official, the IOCs have occasionally pushed the refinery to pay $6 more than the market price. As a result, the company has been compelled to lower its output and incur higher costs for the import of crude from nations like the United States.
"Recall that the NUPRC met with Nigerian refinery owners and crude oil producers recently to ensure full adherence to the Domestic Crude Oil Supply Obligations as enunciated under section 109(2) of the Petroleum Industry Act," he stated. Apparently, the IOCs’ objective is to ensure that our petroleum refinery fails. It is either they are deliberately asking for a ridiculous/humongous premium or they simply state that crude is not available. At some point, we paid $6 over and above the market price. This has forced us to reduce our output as well as import crude from countries as far as the US, increasing our cost of production.
It seems that the IOCs want to make sure that Nigeria continues to be a nation that imports refined petroleum products and exports crude oil. The intent of these companies, known as IOCs, is to increase their countries' GDP by exporting raw materials, which would boost employment and wealth there, and then dump the pricey refined products into Nigeria, increasing our reliance on imports. The multinational corporations are using the same tactic in every commodity, which has led to unemployment and poverty in Nigeria and Sub-Saharan Africa as they amass wealth at our expense.
This is just plain old exploitation. Regretfully, the nation is further strengthening their position by continuing to provide import permits at the expense of our economy and at the cost of the health of the Nigerians who are exposed to carcinogenic products.”
The Economic Community of West African States' regulations are reportedly being followed by Dangote in the production and distribution of diesel, but "licences are being issued, in large quantities, to traders who are buying the extremely high sulphur diesel from Russia and dumping it in the Nigerian market."
"Since the US, EU, and UK implemented a price cap scheme on Russian petroleum products on February 5, 2023, many vessels are waiting near Togo with Russian ultra-high sulphur diesel and they are being purchased and dumped into the Nigerian market," Edwin clarified.
Some European nations were extremely concerned about the carcinogenic effects of the extra-high-sulfur diesel that was being poured into Nigerian market that countries like Belgium and the Netherlands imposed a ban on such fuel being exported from its country, into West Africa recently. Sadly, the country is giving import licences for such dirty diesel to be imported into Nigeria when we have more than adequate petroleum refining capacity locally.”
He noted that in order to harmonise their standards with those of the European Union, Belgium and the Netherlands had implemented new quality criteria in May, thereby stopping the supply of inexpensive, subpar fuels to West Africa.
Edwin said that these actions brought fuel export regulations into line with local European markets, focusing on high-sulfur and high-chemical petrol and diesel.
He described how these fuels, which might have up to 10,000 parts per million of sulphur, were once exported at a discount to consumers in Nigeria and other West African nations.
He said that Zakia Khattabi, Belgium's environment minister, declared that his nation would be following the Netherlands' lead and forbade the shipping of subpar petrol and diesel to West Africa through the ports of Amsterdam and Rotterdam in April 2023.
"For far too long toxic fuels have been departing from Belgium to destinations including Africa," he cited Khattabi as saying. They are even carcinogenic and contribute to the terrible air pollution in nations like Ghana, Nigeria, and Cameroon.
Edwin recounted how a September 2017 Public Eye investigation found that poisonous and contaminated fuels were being shipped in significant quantities from the ports of Rotterdam and Amsterdam to markets in Africa.
He reaffirmed that up to 25% of the petrol and diesel accessible in West Africa came from the ports of Amsterdam, Rotterdam, and Antwerp, emphasising that these fuels contain up to 400 times the allowed limits of sulphur and other pollutants, including the carcinogen benzene.
Edwin angrily declared, "The Dangote refinery has expanded into foreign markets as a result of the Nigerian Midstream and Downstream Petroleum Regulatory Authority's decision to grant licences indiscriminately for the importation of dirty diesel and aviation fuel." Recently, the refinery exported aviation fuel and diesel to Europe and other regions of the world. The same industry players opposed us when we attempted to lower the cost of aviation fuel and diesel, but as I have stated, our goal is to expand our economy.
He mentioned that the refinery has been able to sell its products to Europe and other regions of the world because it satisfies international standards and follows strict guidelines and laws to protect the local environment.
When submitting an appeal to the Federal Government and the National Assembly to urgently intervene for speedy implementation of the PIA and to ensure the interest of Nigeria and Nigerians are protected, he remarked, “Recently, the government of Ghana, through legislation has banned the importation of highly contaminated diesel and PMS into their county.
"It is unfortunate that import permits are still issued in Nigeria when it is known that we are capable of producing about twice as much as is required domestically and even exporting the excess. ECOWAS regulations have made it illegal to import severely contaminated diesel into the region as of January 2021.
Aliko Dangote, the president of the Dangote Group, said that the IOCs were preventing him from obtaining crude oil and that certain influential people were obstructing his refinery.
You don't expect people to pray for you in a system where they have been accustomed to counting good money for 35 years and then see that those days are coming to an end. You anticipate them to fight back, of course.
And I believe that's the actual process we're currently going through. In actuality, though, this refinery is necessary for the nation, the subregion, and the continent of sub-Saharan Africa. You anticipate that they will fight through a lack of crude supplies and product purchases, but I believe that these measures are only temporary. We'll arrive," Aliko continued.
Dangote said that Khalid Al-Falih, a former Saudi Arabian minister of energy, had once convinced him to abandon the notion of constructing a refinery. He claimed, though, that he informed the former minister that he didn't require his counsel.
When I was in Saudi Arabia four years ago for the fasting period, I received an invitation to Dr. Falih for the fast-breaking ceremony, who used to be the Minister of Energy invited me to come and break the fast with him and I went there. He just said, ‘Aliko, I heard that you’re planning on building a refinery, what capacity?’ I said 650,000. He kept quiet for a while and said, ‘You know just about 120km from Mecca, we are building one and I think I would like you to go and have a look. We as Saudi Aramco, are facing a lot of challenges and, we are proceeding with it, but my advice to you is not to do it because normally, refineries are built by major oil corporations or sovereign countries.’
"But Your Excellency, regrettabl