Operational Cost Woes: Dangote Refinery Urges NUPRC to Enforce Local Supply Law

Dangote Oil Refinery has urged Nigeria's upstream oil regulator to enforce laws ensuring local refineries receive sufficient crude oil. Lax enforcement is cited as increasing operational costs, with the refinery paying premiums to international traders. The 650,000 bpd refinery struggles with supply despite the Domestic Crude Supply Obligation law.

Dangote Oil Refinery has called on Nigeria's upstream oil regulator to enforce a law that mandates local refineries receive crude oil supplies, citing lax enforcement as a cause of rising operational costs.

The refinery, with a capacity of 650,000 barrels per day, built by Africa's richest man Aliko Dangote on the outskirts of Lagos for $20 billion, has faced supply challenges due to vandalism and low investment in Nigerian oil production. In a statement, Dangote Refinery accused the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) of failing to enforce the Domestic Crude Supply Obligation (DCSO), a law requiring producers to supply domestic refiners with a portion of their production.

Anthony Chiejina, a Dangote Refinery spokesperson, stated, "Our concern has always been that the NUPRC is pushing, but the international oil companies are not following the instructions. Consequently, we often purchase the same Nigerian crude from international traders at an additional $3-$4 premium per barrel, which translates to $3-$4 million per cargo."

(With inputs from agencies.)