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Seven major marketers get approval to sell Dangote fuel
The $20 billion Dangote Petroleum Refinery has registered the seven main oil marketers in Nigeria in order to lift and distribute refined petroleum products produced by the facility.
Under the Major Oil Marketers Association of Nigeria's auspices, dealers declared on Sunday that following registration, they would start distributing fuel produced at the facility as soon as the business terms were worked out.
This coincided with the announcement made by the Independent Petroleum Marketers Association of Nigeria that they would be meeting this week to discuss terms of product loading with the Dangote refinery management.
Also, according to the Petroleum Products Retail Outlets Owners Association of Nigeria, PETROAN has been collaborating with the multibillion-dollar refinery's management to supply goods from the facility.
Major marketers who are members of MOMAN have already registered with the plant and are prepared to begin purchasing products as IPMAN and PETROAN engage the refinery.
Conoil Plc, Ardova Plc, MRS Oil Nigeria Plc, OVH Energy Marketing Limited, Total Nigeria Plc, NNPC Retail, and 11 Plc are the seven major marketers.
The Dangote Petroleum Refinery declared on Friday that it would start producing aviation fuel, or JetA1, and automotive petrol oil, or diesel.
In a statement released by the company, Aliko Dangote, the president of the Dangote Group, expressed gratitude to President Bola Tinubu for his encouragement, support, and wise counsel in bringing the project to fruition.
In addition, he expressed gratitude to Nigerians for their support and faith in the historic project, as well as to the Nigerian National Petroleum Company Limited, Nigerian Upstream Petroleum Regulatory Commission, and Nigerian Midstream and Downstream Petroleum Regulatory Authority.
"We have begun producing aviation fuel and diesel, and if we get regulatory approval, the products should be available on the market this month. For Nigeria, today is very important. We are thrilled to have accomplished this important goal.
This is a significant accomplishment for our nation since it shows that we are capable of planning and completing major capital projects. This will change the course of our nation, and I am thrilled that this project has come to fruition," Dangote said.
Six million barrels of crude oil have been delivered to the refinery in Lagos so far at its two SPMs, which are 25 kilometres offshore. On December 12, 2023, the first delivery of crude oil was made, and on January 8, 2024, the sixth cargo was delivered.
With its truck-loading gantries, the refinery can load 2,900 trucks per day. According to the company, the refinery's output will meet Euro V standards.
The refinery design uses state-of-the-art technology to comply with emission/effluent norms set by the Department of Petroleum Resources, the US EPA, the World Bank, and Europe.
Located in the Dangote Industries Free Zone in Ibeju-Lekki, Lagos, Nigeria, the Dangote Petroleum Refinery and Petrochemical Project is a subsidiary of Dangote Industries Limited and has a daily capacity of 650,000 barrels of crude oil.
The industrial facility known as the Dangote Petroleum Refinery processes crude oil to produce kerosene, diesel, petrol and other petroleum products that can be used.
In the Lekki Free Trade Zone in Lagos, the Dangote Petroleum Refinery occupies an area of about 2,635 hectares and has a capacity to refine 650,000 barrels of crude oil per day.
Ready for MOMAN
When questioned about whether the facility would distribute the fuel or if major oil marketers would be involved in the lifting of refined products from the Dangote refinery, Clement Isong, the Executive Secretary/Chief Executive Officer of MOMAN, responded, "I confirm that we (major marketers) have met with him (Dangote)."
Isong claims that in order to become product marketers for Dangote Petroleum Refinery, all MOMAN members have registered with the company. He stated to The PUNCH that as soon as the product went on sale, MOMAN members would have it in their stations.
To call buy and sell, we have all registered with Dangote. Every member of my group has a Dangote registration. When the product is prepared and begins to be released, it will be available in our filling station.
I attest to the fact that my members have signed up with them. We have been waiting for the production to begin, and now that it has, they will be talking about the terms of the contract. Indeed, influential marketers and other participants will purchase for the market. The registration was what mattered most.
Therefore, after the commercial terms have been agreed upon with each marketer, they will purchase from them. You can purchase from them in a number of ways. They have loading ranks, over 90, so you can take your truck to go and pick. Vessels can also be used for picking. There are two methods for choosing products.
When asked when product marketers would begin sourcing from the plant, Isong responded, "I'm not sure, but I know we started registration last year. So as soon as they say they are ready we will pick the products. Also as soon as the commercial terms are set, my members will pick.”
In May 2023, former president Muhammadu Buhari gave the Dangote refinery its grand opening. The plant frequently failed to meet its crude oil refining goals because oil producers did not supply the plant with crude.
On the other hand, it began receiving one million barrel batches of crude oil in December 2023, and this month it received its sixth batch. Six million barrels of crude were needed for the refinery to start producing, according to plant officials.
The CEO of MOMAN, meanwhile, expressed excitement about the refinery going online but added that he had no idea what the refinery's pricing strategy would be.
Since you have to pay back your loans and recover your costs and capital, the price should be the going rate. I'm not sure what the going rate will be, but from my global experience in petroleum economics, I know that no one goes into this business to lose money," he said.
Unlike premium motor spirit, or petrol, which has been the topic of controversy over whether or not it is subsidised, the prices of diesel and aviation fuel are completely deregulated commodities.
Concurrently, the CEO of the major marketing company went on to say that the price of crude oil would have a significant impact on the price of fuel from the Dangote refinery.
"We anticipate that product prices will be what is referred to as market price," he stated. Recall that he spent $19 billion building the refinery. He needs to pay back the loan. His contractors must be paid. He must reimburse the capital owners.
"I think he'll sell the product for a price that allows him to recoup his expenses, both financial and operational costs, and then make a profit. I don’t expect the price to be much different from the market price today.
"What's the difference, given that crude oil is also priced in dollars? Even if you purchase locally, the price of crude oil remains the same on a global scale. If you're not going to buy below cost, why not just go back to subsidising? Producing crude oil is very costly. That oil is mostly found offshore.
"Someone told me there would be freight savings, and that may be accurate. But that only makes up a very tiny portion of the price. Crude oil is the primary raw material and accounts for the majority of the cost; refining costs are relatively minimal. I don't think there will be a big price drop—certainly not N400—that's highly unlikely.
Abubakar Maigandi, the president of IPMAN, informed one of our correspondents that this week the association would meet with the Dangote refinery management to discuss the specifics of product loading.
He also stated that independent marketers would not be able to state the project cost of refined petroleum products now, until the commencement of loading.
Maigandi said, "He can give us the price when we start loading, and then we will know how much to sell."
He stated, "We are going to hold a meeting with him this week," in response to a question about when IPMAN members would begin loading. The meeting is scheduled to take place this week, though no specific date has been set yet.
When asked again how much of a break from the price of refined goods Nigerians should anticipate from their companies, the president of IPMAN responded, "We wouldn't want to estimate and we can't say that yet. Thus, it is after our meeting that we can now tell the direction, especially when we start loading products. However, there will be changes.
"We are guaranteed product availability as soon as he releases them, and as long as he is producing, there won't be any more scarcity. It will also generate job opportunities.
Imminent price reduction
Billy Gillis-Harry, the President of PETROAN, stated that the price of refined goods would decrease somewhat, although he pointed out that it would be difficult to provide an exact figure at this time.
He responded, "It is difficult to give an exact figure because so many variables are at play," when asked how much Nigerians should expect in terms of price reductions for diesel and aviation fuel once the products are introduced to the market.
However, the cost of goods and insurance is subtracted from the total because the crude oil being used is for domestic consumption. Therefore, if that is eliminated, prices will