Nigeria’s brand new Dangote oil refinery, touted as the biggest in Africa and Europe, is facing a major hurdle: securing enough crude oil to operate at full capacity. The $20 billion refinery started production in January but has been struggling to find locally produced crude.
Devakumar Edwin, an executive at Dangote, accuses major oil companies of deliberately blocking their access. He alleges that these companies are either demanding exorbitant prices for crude or claiming it’s simply unavailable. This has forced Dangote to rely on expensive imports, driving up production costs.
“It’s either ridiculous premiums or no crude at all,” Edwin said in a statement, adding that the refinery has had to pay $6 above market price for some crudes. This has led to reduced output and a heavy dependence on imported crude, primarily from the United States.
The accusations come amid a dispute over quotas. The Dangote refinery was supposed to receive 325,000 barrels of crude oil per day (bpd) from domestic producers, as mandated by Nigerian regulations. However, oil companies haven’t been able to meet this quota.
Edwin further criticized the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) for indiscriminately granting import licenses to fuel traders. He claims these traders import low-quality fuels that don’t meet regional standards, while Dangote is struggling to adapt its production to higher standards.
The NMDPRA hasn’t responded to these accusations.
As a result of these challenges, Dangote has been forced to look elsewhere. The refinery has exported a staggering 90% of its production, 3.5 billion liters of refined products, to foreign markets.
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