NNPCL not delivering agreed crude volumes – Dangote refinery

The Dangote Petroleum Refinery says the Federal Government has not met its target to supply crude oil to the refinery under the naira-for-crude initiative.

It said the amount of crude received from the Nigerian National Petroleum Company Limited is “peanuts” compared to the volume needed to ramp the production of refined products.

A report by Reuters quoting an interview with the Vice President of Dangote Industries Limited, Devakumar Edwin, said the NNPCL hasn’t met the target to deliver a minimum of 385,000 bpd since the commencement of the program in October.

“We need 650,000 barrels per day. NNPCL agreed to give a minimum of 385,000 bpd, but they are not even delivering that,” the Dangote official said.

To address challenges in accessing foreign currency, the government in July said it would sell crude priced in naira to local refineries for an initial six months starting in October.

Last month, it was reported that four cargoes of crude oil were delivered to the refinery. Informed sources about the local crude sale deal told our correspondent that the refinery was still waiting to receive more crude oil cargoes.

But less than two months after its commencement, the plan may have faltered, making the refinery seek crude purchase from the United States.

The $20bn Lekki-based plant aims to compete with European refiners when operating at full capacity but it has struggled to secure sufficient crude supplies to run optimally.

While Devakumar declined to give specific figures, he described deliveries from NNPC under the scheme as “peanuts”.

Confirming this situation, the acting Executive Director of the Crude Oil Refinery-Owners Association of Nigeria, Mathins Obaze, said Dangote remains the only recipient out of eight operational refineries in Nigeria to have benefited from the naira-denominated crude sale arrangement.

“Members are still unable to access crude in naira and are currently engaging the government for a resolution,” Obaze said.

The reason for the shortfall was not immediately clear. NNPCL did not respond to a request for comment.

The Dangote refinery in August urged the oil regulator, the Nigerian Upstream Petroleum Regulatory Commission to enforce a rule that compels oil producers to supply local refineries.

NUPRC did not respond to a request for comment on the matter.

Dangote, with a current capacity of 425,000 bpd and a year-end target of 85 per cent operational capacity, has turned to international markets for supplies.

It purchased two million barrels of US WTI Midland crude on Wednesday, its first US crude purchase since August, according to trade sources and shipping data.

Meanwhile, NNPC is pursuing new markets for its crude oil. The company was in London on Wednesday seeking term customers for its new Utapate crude oil grade.