Dangote Refinery Blames Third-Party Crude Sales for Rejection of 15.5m Barrels

The Dangote Petroleum Refinery and Petrochemicals has attributed the rejection of about 15.5 million barrels of Nigerian crude in the second quarter of 2026 to difficulties in securing locally produced crude directly from upstream producers at commercially viable prices.

The refinery’s position followed recent reports citing data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), which indicated that approximately 15.5 million barrels of crude offered by domestic producers were rejected by the refinery between April and June 2026.

However, Dangote Industries Limited Group Vice President, Oil & Gas and Fertiliser, Devakumar Edwin, said the figures did not accurately reflect the refinery’s commitment to sourcing Nigerian crude.

Edwin said the refinery remained fully committed to the Domestic Crude Supply Obligation (DCSO) programme and continued to seek Nigerian crude, but faced challenges in obtaining sufficient volumes directly from domestic producers at competitive prices.

According to him, the difficulty had forced the refinery to source a significant portion of its Nigerian crude through International Oil Companies (IOCs) and other third-party intermediaries.

“While we remain fully committed to sourcing Nigerian crude, a substantial portion of the crude allocated under the arrangement has had to be sourced through International Oil Companies and third parties rather than directly from Nigerian upstream producers,” Edwin said.

He explained that the involvement of intermediaries often resulted in additional premiums, transaction costs and other charges, making Nigerian crude more expensive for the refinery.

Edwin said such additional costs could push the price of locally produced crude above internationally recognised benchmarks published by pricing agencies, including Platts and Argus.

This, he noted, could make imported crude and other international supplies more economically attractive to the refinery.

“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,” he said.

The Dangote executive stressed that reliable and commercially viable domestic crude supplies were critical to the sustainability of Nigeria’s refining industry and the refinery’s ability to produce petroleum products at competitive prices for the domestic market.

He also warned that higher crude acquisition costs caused by multiple layers of intermediaries could ultimately affect consumers through increased production costs.

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

He added that increased crude procurement costs could eventually translate into higher prices for refined petroleum products in the Nigerian market.

The refinery’s comments come amid a broader increase in domestic crude deliveries to Nigerian refineries.

Fresh NUPRC data showed that local refineries received approximately 53.7 million barrels of crude in the second quarter of 2026, highlighting the growing role of domestic crude supply in supporting Nigeria’s refining capacity.

The development is expected to intensify discussions among regulators, crude producers, refiners and other industry stakeholders over the implementation of the DCSO and the pricing and distribution of Nigerian crude.

For the Dangote refinery, the central issue remains ensuring that domestic crude is available in sufficient quantities and sold at prices that reflect competitive international market conditions.

The refinery maintains that reducing unnecessary intermediary costs would improve the economics of domestic refining, strengthen the competitiveness of Nigerian crude and ultimately support more affordable petroleum products for consumers.