International oil corporations (IOCs) are driving up the price of crude oil above market rates, as Dangote Industries Limited (DIL) has reiterated. DIL also backs the new supply parameters that the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has established.
These comments were delivered in a statement on Wednesday in Lagos by Mr. Devakumar Edwin, Vice President of Dangote Industries.
Edwin claims that Dangote Refinery’s efforts to get locally produced crude oil for its refining process have continuously been hampered by IOCs in Nigeria.
He stated that cargoes from trading arms are available for $2–$4 per barrel more than the official pricing set by the NUPRC.
“When cargoes are offered to the oil company by the trading arms, it is sometimes at a $2-$4 (per barrel) premium above the official price set by NUPRC.
Read Also: Dangote Refinery Refuses To Back Down, Insists IOCs Frustrating Crude Purchase With Over Pricing
“As an example, we paid $96.23 per barrel for a cargo of Bonga crude grade in April (excluding transport). The price consisted of $90.15 dated Brent price + $5.08 NNPC premium (NSP) + $1 trader premium.
“In the same month, we were able to buy WTI at a dated Brent price of $90.15 + $0.93 trader premium including transport.
“When NNPC subsequently lowered its premium based on market feedback that it was too high, some traders then started asking us for a premium of up to $4 million over and above the NSP for a cargo of Bonny Light.
“Data on platforms like Platts and Argus shows that the price offered to us is way higher than the market prices tracked by these platforms.
Read Also: IOCs Are Not Refusing To Supply Dangote Refinery With Crude Oil—NUPRC
“We recently had to escalate this to NUPRC”, Edwin said.
In response to NUPRC CEO Engr. Gbenga Komolafe’s statement that it is “erroneous” to claim IOCs are withholding crude oil from domestic refiners under the PIA, Edwin commended the commission’s efforts to resolve supply issues in the sector.
He also praised NUPRC for its interventions in oil companies’ crude supply requests to IOCs and for publishing the Domestic Crude Supply Obligation (DCSO) guidelines to ensure transparency in the oil industry.
He however said: “If the Domestic Crude Supply Obligation (DCSO) guidelines are diligently implemented, this will ensure that we deal directly with the companies producing the crude oil in Nigeria as stipulated by the PIA.”
