Domestic crude must be available and commercially viable - Dangote Refinery

Dangote Petroleum Refinery and Petrochemicals has addressed recent reports suggesting it rejected 15.5 million barrels of crude oil from local producers in the second quarter of 2026. The company affirmed its commitment to sourcing Nigerian crude oil and supporting the Domestic Crude Supply Obligation (DCSO) framework.

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Our position is straightforward. We are ready and willing to purchase Nigerian crude oil, provided it is available in sufficient volumes and at competitive market prices. Like every refinery, we must procure crude that supports sustainable operations and value creation.

However, the refinery stressed that for domestic refining to be sustainable and provide affordable petroleum products, the crude oil must be available in sufficient quantities and offered on commercially competitive terms. Devakumar Edwin, Group Vice President of Oil & Gas and Fertiliser at Dangote Industries Limited, stated that the core issue is not the nominal volume offered but the quantity genuinely available for purchase under viable conditions.

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This is essential to maintaining the economics of domestic refining and enabling us to deliver petroleum products to Nigerians at affordable and competitive prices.

Edwin highlighted that the refinery has consistently faced challenges securing crude directly from domestic producers. Consequently, much of the crude allocated under the DCSO has been sourced through International Oil Companies (IOCs) and third parties, rather than directly from Nigerian upstream producers. This indirect sourcing often incurs additional premiums and transaction costs, driving prices above international market benchmarks.

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When additional layers of intermediaries introduce premiums, the cost of crude acquisition increases significantly, affecting the overall economics of domestic refining.

"When additional layers of intermediaries introduce premiums, the cost of crude acquisition increases significantly, affecting the overall economics of domestic refining," Edwin explained. He added that higher crude costs ultimately translate into higher prices for refined petroleum products in the local market, underscoring the need for competitive pricing and availability of domestic crude.

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Ultimately, higher crude costs translate into higher costs of refined petroleum products for the local market.