Nigeria: Dangote Refinery 45 Percent Completed, Not Yet Licensed – Nmdpra

Mr Ahmed said the allegations raised by the refinery that its operations are being scuttled owing to a lack of supply of crude oil by International Oil Companies (IOCs) are untrue.

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) on Thursday said the 650,000 barrels per day Dangote refinery is still at the pre-commissioning stage and has not yet been licensed.

The NMDPRA Chief Executive, Farouk Ahmed, disclosed this while speaking to the state house correspondents on Thursday.

Mr Ahmed said the allegations raised by the refinery that its operations are being scuttled owing to a lack of supply of crude oil by International Oil Companies (IOCs) are untrue.

“Well, just like you rightly asked, there are lots of concerns about the supply of petroleum products nationwide and the claims by some media houses that we were trying to scuttle the Dangote refinery; that is not so.

“Dangote refinery is still in the pre-commissioning stage. It has not been licenced yet. We have not licensed them yet. I think they are at about 45 per cent completion. So we can not rely heavily on one refinery to feed the nation because Dangote is requesting that we should suspend or stop all importation of petroleum products, especially automotive gas oil (AGO) or jet kero and direct all marketers to the refinery,” Mr Ahmed said.

He explained that the expectation is not good for the nation in terms of energy security and also not good for markets because of monopoly.

“So, in terms of quality, currently, the AGO quality in terms of sulphur is the lowest as far as West Africa’s requirement of 50 parts per million (ppm). Dangote refinery, as well as some major refineries like Waltersmith refinery, produce between 650 ppm to 1,200 ppm. So, in terms of quality, their quality is much more inferior to the imported quality,” he said.

Background

Last month, the Vice President, Oil and Gas at Dangote Industries Limited (DIL), Devakumar Edwin, accused IOCs in Nigeria of doing everything to frustrate the survival of Dangote Oil Refinery and Petrochemicals.

He said the IOCs are deliberately frustrating the refinery’s efforts to buy local crude by jerking up the high premium price above the market price, thereby forcing it to import crude from countries as far as the United States, with its attendant high costs.

Speaking to a group of energy editors at a one-day training programme organised by the Dangote Group at the time, Mr Edwin also lamented the activity of the NMDPRA in granting licences indiscriminately to marketers to import dirty refined products into the country.

Responding to the claim at the time, the NMDPRA said there is no dirty fuel being imported into the country, noting that it takes seriously its statutory mandate to ensure that only quality petroleum products are supplied and consumed in Nigeria.

The NMDPRA explained that the Economic Community of West African States (ECOWAS) heads of state in 2020 endorsed a declaration adopting the Afri-5 fuel roadmap that requires that certain products have minimum 50 parts per million (ppm) litres of sulphur.

On Wednesday, Mr Edwin insisted that IOCs operating in Nigeria have consistently frustrated the company’s requests for locally produced crude as feedstock for its refining process.

Mr Edwin’s response came against the background of a statement by the Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe.

Mr Komolafe had, in an interview on ARISE News TV, said that “it is ‘erroneous’ for one to say that the IOCs are refusing to make crude oil available to domestic refiners, as the Petroleum Industry Act (PIA) has a stipulation that calls for a willing buyer willing seller relationship.”

He stated that IOCs prefer to sell crude to international trading arms, who then sell it at a margin.

He highlighted that when cargoes are offered to the oil company by the trading arms, it is sometimes at a $2-$4 (per barrel) premium above the official price set by NUPRC.

On Thursday, the House of Representatives resolved to set up an ad hoc committee to investigate the alleged conspiracy by IOCs against the refinery.

The resolution follows a motion of urgent public importance moved by the Minority Leader, Kingsley Chinda (PDP, Rivers) on Thursday.

In the motion, Mr Chinda said the alleged conspiracy undermines the refinery’s performance from complete optimisation.

“The alleged conspiracy against Dangote refinery relates to efforts by the IOCs to deliberately frustrate the refinery’s ability to buy local crude oil by manipulating and increasing the premium price above the market price,” he said.

I had to watch this three times, still don’t believe what I just sawLike what? pic.twitter.com/ywvLUBEIBK— Kalu Aja (@FinPlanKaluAja1) July 19, 2024

Mr Chinda added that “whilst the IOCs are keen on exporting raw materials to their home countries and thus creating wealth and employment for their countries, thereby adding to their GDP, Nigeria continues to be a dumping ground for refined products, thus making us dependent on imported petroleum products.”

Consequently, the House urged the federal government, the NUPRC, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), and well-meaning Nigerians to support Dangote Refinery to succeed.

The refinery

The 650,000 barrels per day Dangote Petroleum Refinery commenced production of diesel and aviation fuel in January.

Announcing the commencement of production, the company said the refinery had received six million barrels of crude oil at its two SPMs 25 kilometres from the shore.

The first crude delivery was done on 12 December 2023, and the sixth cargo was delivered on 8 January.

The company made a further move towards the commencement of the production of refined petroleum products with the receipt of an additional one million barrels of bonny light crude supplied by the Nigeria National Petroleum Company Limited (NNPC Ltd).

In April, the company commenced supplying petroleum products to the local market.

Last month, Mr Dangote said that Premium Motor Spirit (PMS), popularly known as petrol, refined at the refinery, will hit the market by July.

NNPC Limited had earlier announced plans to acquire a 20 per cent stake in the refinery.

However, last Sunday, the President of Dangote Group, Aliko Dangote, said NNPC Ltd now owns only 7.2 per cent stake in the refinery due to its failure to pay the balance of its share, which was due in June.

“The agreement was actually 20 per cent, which we had with NNPC, and they did not pay the balance of the money up till last year, and then we gave them another extension up till June (2024), and they said that they would remain where they have already paid which is 7.2 per cent. So NNPC, the government (sic) owns only 7.2 per cent, not 20 per cent,” Mr Dangote said, according to reports.

Confirming the development in a statement, the NNPC Ltd said its period assessment of the investment portfolio led to the decline in its share of the refinery.