As Premium Motor Spirit, also known as petrol, from the Dangote Petrochemical Refinery hits the local market in two to three weeks, petroleum marketers have expressed fears that the product’s price may be higher than expected. This concern arises because the 650,000-barrel-capacity refinery has not been able to secure feedstock locally from international oil companies. Instead, Dangote Refinery has continued to import crude oil from the United States and other countries at a higher cost. This development has reportedly made its diesel and aviation fuel less attractive to some local marketers due to price reasons.
The marketers, who spoke with reporters on Monday, raised concerns that the cost of importing crude oil would impact the cost of production, which may eventually hike the ex-depot price of Dangote’s PMS. The Chairman of the Dangote Group, Aliko Dangote, has said PMS from the refinery will hit the Nigerian market by the third week of July. Marketers and Nigerians have been hopeful that the Dangote refinery will cut down the price of PMS, which jumped from around N200 per litre to over N600 per litre after the removal of fuel subsidies by President Bola Tinubu on May 29, 2023. However, there are fears among stakeholders that Dangote’s lack of access to local crude oil may dash Nigerians’ hopes of getting cheaper PMS.
National President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Abubakar Maigandi, last week accused Dangote of refusing to partner with the association, which he said would help the company in the market. Meanwhile, the Secretary of the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), Olufemi Adewole, said the price of Dangote petrol would be determined by how he gets his crude oil, saying the association would not want to speculate on the price.
“It is not for us to speculate. The crude he gets at the time he gets it is what determines the price. We are not going to speculate on what we have not received,” Adewole stated. Asked if the NNPC price would not affect that of Dangote, the DAPPMAN secretary retorted, “Whoever we get the product from will determine the price. Has Dangote revealed how much he will sell his PMS? Let’s wait until Dangote releases his price. For as long as Dangote has not released any price, we may watch and wait. We buy diesel from him; we buy aviation fuel from him. Those are the ones that are on right now. Anything on PMS, until then we will cross the bridge. Whatever price he gives us, we will buy and sell to Nigerians.”
Like IPMAN, Adewole also declared that the depot owners were ready to lift PMS from the refinery. “Of course, if Dangote starts PMS loading tomorrow, we will buy from him. We have recently stated that we are ready and willing to cooperate with everybody in the downstream sector. Dangote is the one we will be buying from, forget the fact that we made a press release last week. It is the only refinery that is available for us for now and we are going to buy from them,” he disclosed. On whether his members have registered to get PMS supply from Dangote, he said, “Has Dangote started giving out the PMS? We are picking ATK from him, we are picking diesel; marketers are picking from him, so there is no problem about that. Once he starts PMS, we fall in line too.”
The Vice President of Oil and Gas at Dangote Industries Limited, Devakumar Edwin, had last week accused international oil companies in the country of plotting to frustrate the survival of the new Dangote refinery. Edwin said the IOCs were deliberately and willfully frustrating the refinery’s efforts to buy local crude by hiking the cost above the market price by $6, thereby forcing the refinery to import crude from countries as far as the US, with its attendant high costs.
Edwin stated, “The IOCs are deliberately and willfully frustrating our efforts to buy the local crude. It seems that the IOCs’ objective is to ensure that our petroleum refinery fails. It is either they are deliberately asking for a ridiculous and humongous premium or they simply state that crude is not available. At some point, we paid $6 over and above the market price. This has forced us to reduce our output as well as import crude from countries as far as the US, increasing our cost of production. It appears that the objective of the IOCs is to ensure that Nigeria remains a country, which exports crude oil and imports refined petroleum products. They are keen on exporting the raw materials to their home countries, creating employment and wealth for their countries, adding to their Gross Domestic Product (GDP), and dumping the expensive refined products into Nigeria, thus making us dependent on imported products.”
Meanwhile, the Dangote oil refinery is increasing diesel exports to West Africa, taking market share from European refiners, according to traders and shipping data, Reuters reported. The refinery was producing a lower grade of gasoil than expected as it awaits the restart of units needed to produce cleaner fuels, prompting the plant to seek buyers in neighbouring markets. Exports of gas oil from the refinery hit nearly 100,000 barrels per day in May, nearly doubling April’s levels, Reuters reported quoting data from Kepler. The bulk of the exports, it said, went to other West African countries, but one cargo was shipped to Spain. Preliminary June gasoil volumes have fallen sharply, though overall oil product exports including fuel oil, naphtha, and jet fuel remained relatively elevated at 225,000 bpd, the data showed.
