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Dangote Laments Crude Supply, Accuses IOCs of Using Third Parties

Refinery says intermediaries add premiums and transaction costs, making Nigerian crude less competitive than international alternatives.

Adedayo Bankole Johnson by Adedayo Bankole Johnson
August 12, 2026
in Business, National, Nigeria
Reading Time: 3 mins read
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The Dangote Petroleum Refinery has renewed its complaint over access to Nigerian crude, saying some international oil companies still sell crude meant for domestic refining through third parties, a practice it says adds premiums and transaction costs to feedstock purchases.

The refinery’s latest position followed data from the Nigerian Upstream Petroleum Regulatory Commission on crude supplied under the Domestic Crude Supply Obligation framework, which showed a gap between volumes allocated or offered to local refineries and actual deliveries.

In a statement issued late Tuesday, Group Vice President, Oil & Gas and Fertiliser at Dangote Industries Limited, Devakumar Edwin, said the refinery remained committed to sourcing Nigerian crude but insisted that adequate volumes must be available at commercially viable prices.

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“As a result, 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 said the involvement of intermediaries often resulted in additional premiums and transaction costs that made Nigerian crude more expensive than alternative supplies on the international market.

“This process often introduces additional premiums and transaction costs that can drive crude prices above internationally recognised benchmarks published by agencies such as Platts and Argus,” he said.

According to him, the refinery’s concern was not simply the volume of crude nominally offered under the DCSO arrangement but how much was genuinely available for purchase under commercially viable conditions.

“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,” Edwin said.

He added that higher crude acquisition costs could ultimately affect the economics of domestic refining and the prices of petroleum products.

The disagreement highlights a persistent challenge in Nigeria’s push to expand local refining capacity. The country has invested heavily in domestic processing, but refiners still need reliable access to competitively priced crude to operate at scale.

The DCSO, established under the Petroleum Industry Act, requires oil producers to make specified quantities of crude available to domestic refineries. Yet regulatory data have repeatedly shown a difference between crude volumes offered and those eventually delivered.

In the first quarter of 2026, NUPRC said 61.9 million barrels were allocated to domestic refineries while producers offered 68.7 million barrels. Actual supply was only 28.5 million barrels.

The regulator attributed much of the shortfall to pricing differences between producers and local refiners, with transactions continuing to operate on a “willing buyer, willing seller” basis.

For the second quarter, producers offered 58.8 million barrels against an allocation of 55.1 million barrels.

Dangote’s latest statement places the emphasis on the commercial terms surrounding those supplies.

The refinery has complained about the issue previously. In 2024, it said it had sometimes been forced to buy Nigerian crude through international traders at premiums of about $3 to $4 per barrel because of difficulties securing direct supplies.

NUPRC later strengthened enforcement of the domestic supply rules, warning that crude designated for local refineries could not simply be diverted for export.

The latest dispute comes as the Dangote refinery continues to expand operations. The facility increased its processing capacity to 700,000 barrels per day in June, above its original 650,000-barrel-per-day capacity.

For Nigeria, the implications go beyond Dangote. Reliable domestic crude supply is crucial to reducing dependence on imported refined products, keeping more value within the country and making investments in local refining commercially sustainable.

Edwin said Dangote remained ready to purchase Nigerian crude but maintained that volumes and pricing must support sustainable refinery operations and competitive petroleum-product prices.

Tags: Dangote Refinery
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Adedayo Bankole Johnson

Adedayo Bankole Johnson

Adedayo Bankole-Johnson is a journalist at News Velocity NG with over four years of professional experience in media and broadcasting. He has worked with Pleasant Ambassadors Radio and covered major beats including politics, religion, sports, and national affairs. He currently anchors a weekly programme on Petals FM 102.3.

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