FG Finally Explains Reasons Dangote, Others Don’t Get Enough Crude Supply From IOCs
- The reason international oil corporations are experiencing difficulties supplying crude to domestic refiners has been revealed
- Minister of State for Petroleum Resources said the IOCs have negotiated pre-production agreements to guarantee the offtake of crude products
- He stated that the government would rather provide licenses for the importation of gasoline into the country
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Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.
In the framework of the Domestic Crude Oil Supply Obligation, Senator Heineken Lokpobiri, Minister of State for Petroleum Resources (Oil), has disclosed the reason foreign oil companies are having trouble allocating crude to domestic refiners, such as the Dangote Petroleum Refinery.
Source: Getty Images
According to him, the reason local refiners didn't receive the necessary allocations was that most IOCs had signed pre-production agreements to guarantee the off-take of crude products by regular consumers.
The minister made this known while speaking on Wednesday, February 26, 2025, in Abuja at the ongoing Nigeria Energy International Summit.
Local refiners recently accused the regulator of not providing enough crude oil to local refineries, which prevented domestic refiners from producing as much as they could. They claimed that the authorities preferred to grant licenses for the importation of gasoline.
The downstream regulator stated that less than half of the country's daily gasoline consumption is accounted for by the three main refineries currently in operation.
However, the refiners contended that the government's refusal to provide these facilities with enough crude was the only reason local refiners were not running at full capacity.
It was discovered that, due to neither the DSCO nor any special arrangement, local refineries were not supplied with a single barrel of oil for almost six months.
Lokpobiri reacts to refiners
Addressing the issue, however, the oil minister stated that raising petroleum production was the best way to resolve the problem.
To meet both internal and foreign commitments, he emphasised the necessity of additional investments to increase crude oil production.
“Today, we have a challenge with domestic crude oil supply obligation, which is provided for in the Petroleum Industry Act, but we cannot keep what we do not produce. But you can’t keep what you don’t produce. You can’t keep what you have already committed.
“I do know that most of you know the companies operating in Nigeria had commitments when they were raising funds for investment. But if we increase our production, we’ll be able to get more volumes, satisfy both our domestic obligation and also satisfy our external obligations.”
He claimed that the underwhelming performance of Nigeria's oil and gas sector is due to the difficulties faced by businesses involved in the upstream sector.
He emphasised that local refineries have been adversely affected by the upstream sector's poor performance, which has made it challenging for them to obtain crude oil feedstock for operations.
“The reason why we are struggling in the entire sector is because the upstream is underperforming. And once the upstream succeeds, the midstream will succeed, and the downstream will succeed. I believe the only way we can increase our upstream development is by investments. And these investments will not come for less,” he said.
Source: Getty Images
He asserts that Nigeria can emerge as a significant force in the world market for oil and gas, but this calls for a stable and predictable legal and regulatory environment.
“That is why, within the short period we’ve been in office, less than one and a half years, you can agree with me that we are making steady progress. We are guaranteeing a stable, predictable regulatory and legal framework. We are making policies that will make our fiscals globally competitive,” he added.
Where to buy cheap Dangote petrol at N860 per litre
Earlier, Legit.ng reported that Dangote Refinery crashed its petrol ex-depot prices again by N65 per litre after reducing diesel prices by N55 last week.
The refinery announced on Wednesday, February 26, 2025, that its ex-depot prices have reduced from N890 to N825.
The new price showed a reduction of N65 per litre and would become effective from February 27, 2025.
Proofreading by James, Ojo Adakole, journalist and copy editor at Legit.ng.
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