Business

Dangote refinery: IOCs insist on selling crude via foreign agents

Published

8 months ago

July 18, 2024

Dangote refinery: IOCs insist on selling crude via foreign agents

The Vice President, Oil and Gas, at Dangote Industries Limited (DIL), Devakumar Edwin, on Wednesday insisted that International Oil Companies (IOCs) operating in Nigeria have consistently frustrated the company’s requests for locally produced crude as feedstock for its refining process.

The management of Dangote Industries Limited disclosed it in a statement on Wednesday.

Mr Edwin’s response came against the background of a statement by the Chief Executive Officer of 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.”

Last month, Mr 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 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.

On Wednesday Mr Edwin noted that the NUPRC has been very supportive to the Dangote Refinery as it intervened several times to help the facility secure crude supply.

However, he said the NUPRC chief executive was probably misquoted by some people hence his statement that IOCs did not refuse to sell to the company.

“To set the records straight, we would like to recap the facts below. Aside from Nigerian National Petroleum Company Limited (NNPC Ltd), to date we have only purchased crude directly from only one other local producer (Sapetro). All other producers refer us to their international trading arms,” Mr Edwin said.

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He explained that these international trading arms are non-value adding middlemen who sit abroad and earn margin from crude being produced and consumed in Nigeria.

“They are not bound by Nigerian laws and do not pay tax in Nigeria on the unjustifiable margin they earn. The trading arm of one of the IOCs refused to sell to us directly and asked us to find a middleman who will buy from them and then sell to us at a margin. We dialogued with them for nine months and in the end, we had to escalate to NUPRC who helped resolve the situation,” Mr Edwin said.

He added that when the company entered the market to purchase crude requirement for August, the international trading arms claimed that they had entered their Nigerian cargoes into a Pertamina (the Indonesia National Oil Company) tender, and it 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,” he said.

Commending the NUPRC for its various interventions in the oil company’s crude supply requests from IOCs, and for publishing the Domestic Crude Supply Obligation (DCSO) guidelines to enshrine transparency in the oil industry, Mr Edwin said “If the DCSO guidelines are diligently implemented, this will ensure that we deal directly with the companies producing the crude oil in Nigeria as stipulated by the PIA.”

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.

“As an example, we paid $96.23 per barrel for a cargo of Bonga crude grade in April (excluding transport). The price consisted of $90.15 dated Brent price + $5.08 NNPC premium (NSP) + $1 trader premium. In the same month we were able to buy WTI at a dated Brent price of $90.15 + $0.93 trader premium including transport.

“When NNPC subsequently lowered its premium based on market feedback that it was too high, some traders then started asking us for a premium of up to $4 million over and above the NSP for a cargo of Bonny Light. 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”, Mr Edwin said.

He urged the regulatory commission to take a second look at the issue of pricing.

“NUPRC has severally asserted that transactions should be on a willing seller/ willing buyer basis. The challenge however is that market liquidity (many sellers/ many buyers in the market at the same time) is a precondition for this. Where a refinery needs a particular crude grade loading at a particular time then there is typically only one participant on either side of the market.

“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.

“The $2-$4 is per barrel. It is important that we specify it so people understand the magnitude. Without specifying per barrel may mean it is just $2-$4 on the full value of the cargo, which is insignificant,” he said.

Dangote refinery: IOCs insist on selling crude via foreign agents

Related Topics:crude Dangote refinery Featured IOC

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Aviation

Aviation workers threaten nationwide airports shutdown over Customs officer assault

Published

19 hours ago

March 25, 2025

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Aviation workers threaten nationwide airports shutdown over Customs officer assault

Aviation unions have announced plans to shut down airports across Nigeria starting March 31 in protest against the failure to remove a customs officer who allegedly assaulted the Director of Aviation Security at the Federal Airports Authority of Nigeria (FAAN).

In a joint statement signed by Ocheme Aba (NUATE), Frances Akinjole (ATSSSAN), and Abdul Rasaq Saidu (ANAP), the unions condemned the repeated physical assaults on FAAN staff, vowing not to tolerate such incidents any longer.

The unions also called on the government to urgently reduce the number of customs officers operating within the aviation sector, aligning with global best practices. They warned that if their demands are not met, they will proceed with the nationwide shutdown, potentially disrupting air travel and operations.

The statement reads: “Considering the enormity and frequency of physical and psychological assault on the staff and management personnel of FAAN, of which there is no end in sight, we are compelled to inform the management of the unwavering determination of our unions to cause the establishment of a clear framework of mutual respect among FAAN staff and the security agencies operating at the airports.

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“Consequential sanctions are in place which guarantee the safety and human rights of FAAN staff. We shall direct all the workers to withdraw from the airports with effect from March 31, 2025, pending when such protocols are established.

“The recent assault on no less a personality than the Director of Aviation Security of FAAN is one too many, which leaves a taste too bitter to swallow. It is our sincere hope that our demand in the above respect is well met to avoid the industrial conflagration that will ensue in the absence of acceptable remedial actions.”

In response, Abdullahi Maiwada, the spokesperson for Customs, stated in a recent release that the disagreement between FAAN officials and officers of the Nigeria Customs Service (NCS) stemmed from a miscommunication over equipment movement and seating arrangements.

Aviation workers threaten nationwide airports shutdown over Customs officer assault

Business

SEC announces stricter measures to protect investors

Published

2 days ago

March 24, 2025

Trends Admin

Director-General of SEC, Dr. Emomotimi Agama

SEC announces stricter measures to protect investors

The Securities and Exchange Commission (SEC) has reaffirmed its commitment to protecting investors in Nigeria’s capital market by cracking down on fraudulent activities.

According to the Director-General of SEC, Dr. Emomotimi Agama, operators engaging in unscrupulous practices will face strict penalties as the Commission prioritizes safeguarding investor interests.

“So, clearly for us, it is getting people to understand that there is no hiding place anymore for anybody that has the intention to defraud Nigerians and to defraud anybody that is investing in this market,” Dr. Agama stated, emphasizing the Commission’s zero-tolerance policy.

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Dr. Agama highlighted that the Investments and Securities Act (ISA) 2007 serves as the framework for securities regulation in Nigeria, ensuring that market operators adhere to high ethical standards.

He emphasized the importance of the “fit and proper person’s test,” which requires operators to meet specific regulatory criteria to maintain their licenses.

“This is because the very ethics of regulating or registering a securities market operator is in the principle of the fit and proper person’s test,” he explained.

“What you have been seeing most recently by the revocation of licenses, the suspension of operators and our follow-up to operators that are not registered with the SEC is only a tip of the iceberg as to what we intend to do this year.”

Dr. Agama assured stakeholders that the SEC will leverage its regulatory powers under Nigerian law to deter fraudulent activities, noting, “We believe strongly that a protected investor is a powerful investor.”

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Business

Bitcoin rises above $86,000 as crypto market gains momentum

Published

2 days ago

March 24, 2025

Trends Admin

Bitcoin rises above $86,000 as crypto market gains momentum

Bitcoin and other leading cryptocurrencies extended their gains on Monday, buoyed by positive investor sentiment despite concerns over upcoming U.S. tariffs and key economic data releases later this week.

As of 7am WAT, Bitcoin rose 3.2% to $86,590, while Ethereum gained 2.3%, trading at $2,047.

The global cryptocurrency market capitalization increased by 2.94% in the past 24 hours, reaching $2.84 trillion.

Other notable performers included XRP, Cardano, and Dogecoin, which posted gains of 3%, 2%, and 3.8%, respectively. Chainlink, Avalanche, Hedera, and Stellar recorded growth ranging from 3% to 10%.

“Bitcoin is holding above $86,000, registering a 3% gain today. The key resistance level to watch is $86,700; a breakout could pave the way for $90,000,” said Vikram Subburaj, CEO of Giottus.

Bitcoin’s market capitalization surged to $1.727 trillion, with dominance rising to 60.73%. Its 24-hour trading volume soared by 93% to $18.2 billion, while stablecoin transactions accounted for 94.74% of total crypto trading, reaching $57.58 billion, according to CoinMarketCap.

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Solana Outperforms Peers Amid Positive Market Sentiment

Solana (SOL) emerged as a standout performer, surging over 7% in the past 24 hours to trade above $139.

The rally was fueled by reports suggesting that President Trump’s April 2 tariffs may be more targeted than initially feared, easing market concerns.

Weekend rumors indicated that the tariffs might include country exemptions and non-cumulative charges on metals, contributing to improved sentiment across global markets.

The Federal Reserve’s projections for two rate cuts this year further supported risk assets, with the central bank describing potential tariff-induced inflation as “transitory.”

BitMEX co-founder Arthur Hayes expressed optimism about Bitcoin’s trajectory, stating, “The Fed’s policy orientation could help Bitcoin achieve $110k before it retests $76.5k.”

Solana’s momentum aligns with unprecedented acceptance rates. DeFiLlama reported that Solana’s total value locked (TVL) reached 54.87 million SOL, its highest level since June 2022. Ali Charts revealed that a record 11.09 million addresses now hold SOL, underscoring growing adoption.