Dangote Unlikely to Deliver Fuel in July as Regulator Reacts to Claim of Bringing Down Refinery

• Industry experts fear that a lack of crude oil could postpone Dangote Refinery's July debut
• Analysts are predicting August, September or December at worst as the feasible date for supply
• Meanwhile, the petroleum regulator said it would mandate international oil companies to supply crude oil to the refinery

Legit.ng journalist Zainab Iwayemi has over 3-year-experience covering the Economy, Technology, and Capital Market.

A scarcity of crude oil may cause Dangote Oil Refinery's much-anticipated July entry into the gasoline supply market to be delayed, an industry insider has said.

The source said this amid worries that Dangote may not be able to reach its goals for refining gasoline due to a shortage of easily accessible crude oil.

July prediction uncertain

The Lekki, Lagos-based refinery, with a 650,000 barrels per day (bdp) capacity, was supposed to start operating in July. Its goal is to lower Nigeria's dependency on imported fuel drastically.

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A source in the oil trading business told BusinessDay

“The refinery has yet to receive the required volumes of crude oil needed to refine PMS for the July takeoff.”

According to Jide Pratt, country manager of Trade Grid, the Dangote refinery is unlikely to make the July deadline, which supports a large network of independent dealers throughout Africa.

Pratt said,

“The issue of crude supply is still a major issue, and postulations on how the premium motor spirit (PMS) will be sold in USD are unattended to,”

“A safe assumption may be August or September at best and December at worst.”

“It’s clear that subsidy still exists and the possibility of selling to NNPC is reduced, as it currently has trade account receivables with traders over 160 days. The Dangote Refinery is a commercial entity and will unlikely toe this line of credit sales with its running cost and interest payments.”

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To date, Dangote Refinery has only taken delivery of Nigerian and US crude grades. Still, it could increasingly seek alternative term contracts with other supply sources as it scales production, traders have speculated.

One source said,

“It’s not unexpected that they would seek to cover base requirements for the refinery through term business in the same way that some Indian refiners do with Middle Eastern crude.”

NUPRC reacts to a claim of bringing down the refinery

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC), on June 3, said it would mandate international oil companies (IOCs) to supply crude oil to the Dangote oil refinery.

Olaide Shonola, spokesman of NUPRC, told BusinessDay that the commission is intervening to ensure the local sale of crude to Dangote and other refineries in the country.

Shonola stated this while reacting to a claim by president of the Dangote Group, Aliko Dangote, that the international oil companies are not ready to sell crude to the refinery.

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she stated,

“We’ve been intervening and intervening. I am sure you’re aware of a recent meeting that was held with them on domestic crude oil supply. We will keep engaging them, NUPRC has been doing that,” Shonola said.

“I can’t say we will force them. But as the regulator, we can mandate. And that’s what we are doing, giving clear directives that this must be done. We will just keep on engaging, and you will agree with me that most of these things have to be planned. We will keep on engaging. We will do our regulatory function in that area.”

Dangote plans to go into steel production

Legit.ng reported that Aliko Dangote, Africa's richest man and a leading industrialist, is preparing to embark on his next ambitious venture: a steel production company.

Dangote disclosed his new ambition while speaking at the Afreximbank Annual Meetings (AAN) d AanfriCaribbean Trade & Investment Forum in Nassau, The Bahamas, on Wednesday, June 12.

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Dangote's new steel company is expected to boost Nigeria's steel production capacity significantly, reducing the country's reliance on imports.

Source: Legit.ng