As global refineries falter from Middle East conflicts and China’s gasoline-diesel export ban, Dangote Petroleum Refinery & Petrochemicals steps up as Nigeria’s energy lifeline, the company has announced.
The refinery vows unwavering support for the domestic market, shielding Nigerians from worldwide petroleum shortages. “Domestic refining delivers benefits like this,” the company states in a new press release.
Benchmark Brent crude has surged 26% to over $84 per barrel, alongside spiking freight costs. In response, Dangote raised its ex-depot price for Premium Motor Spirit (PMS) by a modest N100 per litre - a 12% hike.
Crucially, the refinery has shouldered 20% of the cost surge itself to ease the blow on local buyers, even as it pays full international rates for crude from Nigerian or foreign sources, the company explains.
This strategic move underscores Dangote’s role in stabilizing Nigeria’s fuel supply amid turbulent times, it further explains.
“It is worth noting that Nigerian crude oil is more expensive than the Brent benchmark price by $3 to $6 per barrel. After adding freight of $3.50 per barrel, crude oil will be landing in our tanks between $88 and $91 per barrel. For context, crude oil was landing our tanks at about $68 per barrel when our ex-depot price was N774/litre,” the statement noted.
Continuing, it maintains: “while we receive about five cargoes a month from NNPC, which we pay for in Naira, these cargoes are priced at international market prices + Premium and fall short of the 13 cargoes which we require to support sales into Nigeria. We therefore, end up procuring foreign exchange at open market rates to pay for crude cargoes purchased from local and international traders.”
The high crude cost, Dangote Refinery added, is compounded by the fact that “Nigeria upstream producers have failed to supply crude oil to the refinery as required under the PIA, forcing us to source a substantial portion through international traders who charge an additional premium.”
The statement further states: “As a private enterprise operating in a deregulated environment, Dangote Petroleum Refinery has remained responsive and has made significant sacrifices by aligning pricing with market realities to ensure sustainability, particularly as it sources all its crude at prevailing international market prices, whether locally or from foreign suppliers.
“Selling below cost would undermine its ability to procure crude, sustain production and guarantee 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 periods of global instability.
“The refinery is also accelerating deployment of Compressed Natural Gas-powered trucks to cushion the impact of global shocks, enhance nationwide distribution efficiency, reduce logistics costs and improve delivery timelines across the downstream sector. The rollout is scheduled to commence this month.
“We remain committed to transparency, operational excellence and the long-term objective of securing sustainable energy security and stability for Nigeria at an affordable cost.”
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