BUSINESS

IOCs selling Nigerian crude to us through foreign middlemen – Dangote

By Babajide Adekunle

Mr. DVG Edwin , vice president, Oil & Gas, Dangote Industries Limited, has said that international oil companies operating in Nigeria, wanted his company to purchase crude oil from it through international middlemen. He said the IOCs action contradicts the ‘Domestic Crude Supply Obligation guidelines’ contained in the Petroleum Industry Act (PIA).

He said, “The trading arm of one of the IOCs refused to sell to us directly and asked us to find a middleman who would buy from them and then sell to us at a margin.” On steps taken to address the issue, Edwin said, “We dialogued with them for nine months and in the end, we had to escalate to the Nigerian Upstream Regulatory Commission (NUPRC) who helped resolve the situation,” Edwin stated.

The Dangote refinery company has repeatedly alleged challenges it faces in purchasing crude oil from the IOCs.

Edwin also claimed that the IOCs are selling to crude to Dangote refinery at higher prices that what is obtainable elsewhere.

“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. We recently had to escalate this to NUPRC,” Edwin said.

He added, “When we entered the market to purchase our crude requirement for August, the international trading arms told us that they had entered their Nigerian cargoes into a Pertamina (the Indonesia National Oil Company) tender, and we had to wait for the tender to conclude to see what is still available. This is not the first time. In many cases, particular crude grades we wish to buy are sold to Indian or other Asian refiners even before the cargoes are formally allocated in the curtailment meeting chaired by NUPRC.”

“It is to avoid the problem of price gouging in an illiquid market that the domestic gas supply obligation specifies volume obligation per producer and a formula for transparently determining pricing. The fact that the domestic crude supply obligation as defined in the PIA has gaps is no reason for wisdom not to prevail,” Edwin stated.

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