Ademola Adigun: It’s not Nigeria’s duty to provide crude to Dangote refinery

Ademola Adigun, an oil and gas expert, says it is not the responsibility of Nigeria to provide crude for the Dangote refinery. 

Adigun was speaking on the current struggles of the refinery in purchasing crude feedstock from international oil companies (IOCs) on Channels Television’s Sunrise Daily programme on Thursday.

The energy expert explained that just as it is not the duty of a land developer to provide land for anyone wishing to develop a property, it is not the responsibility of Nigeria to provide crude oil for the Dangote refinery.

“I have heard that many times and I have asked people, is it our job to provide crude for Dangote refinery that is owned by Dangote? If you were a land developer and you want to make some land development, would it be my job to provide you land?” he asked.

“The first thing any businessman does is supply chain security. It is not Nigeria’s job to provide him crude. I mean I see sentiments around it. A businessman must guarantee his supply chain before he goes into the business.”

Adigun said the Dangote refinery, which is not covered by the domestic crude supply obligation (DCSO) agreement, being located in an export processing (free) zone, is not obligated to sell its product to Nigeria. 

He said the refinery should have expectations for supply of domestic crude oil but the country produces 1.3 million barrels per day.

Adigun added that the government has committments and does not own all the crude produced. 

“Remember the IOCs will take care of their own share of the crude as well and they are not compelled to sell to Dangote. It is a free market thing. The Petroleum Industry Act (PIA) says free market, free sales, free purchases,” the expert said. 

“They cannot be compelled to sell to you or to anybody. There must be an agreement they have had before Dangote came on stream.” 

According to the oil and gas expert, local crude oil suppliers have supply chain agreement with a lot of refineries around the world. 

“So I’ll sell to the person who gave me the best deal. The Nigerian National Petroleum Company (NNPC) Limited might decide to give all its crude to Dangote,” Adigun said.

He said the NNPC has several crude supply agreement like that of the “90,000 barrels per day to secure a loan for Nigeria, which it was compelled to by government”. 

“The same NNPC has to guarantee supply of petrol which it has to use its crude to sell. The same NNPC is owed over N2.2 trillion by the government,” the energy expert added.

On July 17, the management of Dangote Industries Limited (DIL) had insisted that IOCs are frustrating its request to purchase crude feedstock for the Dangote refinery.