My refinery imports 10m barrels of crude monthly, IOCs are our biggest hurdle – Dangote

Aliko Dangote, president of Dangote Petroleum Refinery, says the plant currently imports about 10 million barrels of crude oil from the United States and other countries every month.

Speaking on Tuesday during his keynote speech at the West African Refined Products Pricing and Markets Development Conference in Abuja, Dangote said international oil companies (IOCs) have been the most difficult part of the refinery’s journey.

He said when the construction of the refinery was completed, one of the first commercial shocks encountered was “crude feedstock sourcing.”

“At the project inception, it was reasonable to assume that in a country producing about 2 million barrels per day, securing crude would be the least of our worries. But we were wrong,” Dangote said.

The billionaire said instead of buying crude directly from Nigerian producers at competitive terms, the refinery had to engage with international trading companies “who are buying Nigerian crude and reselling it to us with hefty premiums.

“Of course, as we speak today, we buy about 9 to 10 million barrels of crude monthly from the United States and other countries,” he added.

Dangote said the Nigerian National Petroleum Company (NNPC) Limited had made some Nigerian crude cargoes “available to us from the start to date.

“They have done very well. But it’s been very, very difficult with the IOCs. IOCs have been the most difficult part of our journey,” the businessman said.

He said another challenge was encountered during crude transportation. “Lifting schedules were constantly shifted by upstream operators, and we were hit with excessive port and regulatory charges.

“Skyrocketing port charges made up about 40 percent of the total freight cost, meaning it cost two-thirds as much as chartering a vessel with the crew, insurance, and fuel included,” Dangote said.

He said refiners in India, despite sourcing crude from farther distances, enjoy “lower freight charges than we do right here in West Africa because they are not saddled with exorbitant port charges.

“In terms of port charges, it is currently more expensive to load a domestic cargo of petroleum products from Dangote refinery, as customers pay both at the loading point and also at the discharge point,” Dangote said.

“But when they load from Lome, that competes with us; they pay only at the port of discharge.”

The businessman said this is “simply unfair and unsustainable.”

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