Oil Refiners Back Dangote, Decry IOCs’ Refusal to Sell Crude to Local Refineries

•Say support for local production will guarantee price reduction

Emmanuel Addeh in Abuja

The Crude Oil Refineries Association of Nigeria (CORAN) has backed Dangote Oil Refinery and Petrochemicals Limited on its recent allegation that Nigerian oil producers, especially the International Oil Companies (IOCs) were actively obstructing the refinery’s operations by refusing to guarantee crude supply.

Reacting to the report, the Chairman of CORAN, MomohOyarekhua, said that Dangote Refineries, as a member of CORAN, expressed exactly the concerns of many other members who had been faced similar bottlenecks had observed.

A statement from the organisation said Oyarekhua spoke on Channels Television, stressing that the problem had caused serious operational dilemmas due to the hurdles of obtaining crude oil locally for operations.

“I will take it from the angle of producers of crude rather than focusing on the IOCs alone.  What we usually call IOCs are the international producers, but I do not think it is just about the international producers and operators in Nigeria.

“I think it’s more about the producers of crude in Nigeria that are perhaps frustrating the refineries in Nigeria from getting crude.

“In fact, we have been on this journey. I, particularly have been on this journey of advocating for crude sales to local refineries and also where necessary for the modular refineries for crude to be sold to them in naira.

“This is because most of our products are produced into the local market and income is actually in naira and it is just common sense that if you sell products in naira you should be able to get your feedstock in naira.

“This is mostly when that feedstock is produced in Nigeria, so that you don’t put pressure on the US dollar that is already scarce in the country,” it quoted him as saying.

Oyarekhua said there had been several engagements with the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), stressing that the Domestic Crude Oil Supply Obligation in the Petroleum Industry Act (PIA) should be adhered to.

“I think that law was specifically put there by legislators not to starve the refineries. But what we have seen is a huge and still resistance by the producers of crude in Nigeria. They will rather prefer to export crude abroad to selling to local refineries,” he pointed out.

He insisted that the cost of finished products would reduce drastically if local refining is encouraged, instead of importation of finished refined products that do not even meet quality standards.

“We all saw that when Dangote came on stream, diesel dropped from NGN1,600 to about NGN1,200, and as we speak today, from our refineries, we are even selling less that NGN1,100. This is to tell you how far producing crude locally can support the economy and can support the people of Nigeria,” he argued.

He emphasised that if there are functional refineries in the country, it is difficult to understand why the refineries cannot be supported, urging the government  to play its role to ensure that the laws are implemented.

Oyarekhua stated that the association was deeply saddened by the lack of support for its members over the past three to four years.

“As it stands today, with Dangote’s production and production from the modular refineries, we are currently self-sufficient in the production of the primary products which are diesel, fuel oil, naphtha and kerosene.

“Dangote is producing aviation fuel, so there is really no reason for the importation of products into the country,” he added.

He further expressed dismay that marketers were doing everything to frustrate refineries, stressing that he hoped that the difficulties will be removed as soon as possible so that members can go into full production to meet installed capacity.

Earlier this week, Vice President, Oil and Gas at DIL, Devakumar Edwin, had accused the IOCs of inflating prices of local crude oil, and making it prohibitively expensive for the refinery to purchase in Nigeria.

CORAN also joined the Dangote Refineries to call on the National Assembly and the executive arm of government to intervene in the oil & gas sector to avert further unwholesome experiences faced by its members.