Victor EzejaAmid the ongoing face-off between the Dangote Refinery Limited and the regulators in Nigeria’s oil and gas sector over domestic crude oil supply obligation, businessman and media entrepreneur, Dumebi Kachikwu, has said no refinery in the world depends on local producers for supply of feedstock.
Kachikwu, a former presidential candidate of the African Democratic Congress (ADC), said major refineries across the world secure supply contract from producers across the world from where they import feedstock and do not solely depend on local producers for crude they need to run their refineries.
Join our WhatsApp Channel“There’s no refinery in the world that depends solely on crude oil or domestically produced crude oil,” Kachikwu said during an interview on Arise Tv on Tuesday morning.
He cited examples of countries with large refineries but don’t have proven reserves of crude oil, stating that they rely on importation to meet their supply needs.
“There are nations that don’t have oil, but have refineries. Out of the top seven refineries in the world, two of the biggest refineries are in South Korea. South Korea has no proven reserves of oil. Singapore exports petroleum products. They have no proven reserves. So, the refinery business is such that people get their crude oil from any part of the world where they have crude contracts.
“America, from 2018 to 2022 was the largest oil producer in the world, but America buys good oil from all over the world. So, I don’t want, I don’t think we are on the right path when we make this whole issue about government, NUPRC and NNPC not giving Dangote enough crude oil,” Kachikwu stated.
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The Founder and CEO of Roots Television said Dangote Refinery should be blamed for failing to plan for crude supply from other sources across the world, ahead of the commencement of operations.
The Dangote Group had repeatedly within the last two months complained about inability to get adequate crude supply from domestic producers.
The Nigeria Upstream Petroleum Regulatory Commission (NUPRC) said it had facilitated domestic supply of over 2.9 million barrels of crude oil to Dangote Refinery from January to June 2024. According to a statement last week from the upstream regulator, other local refineries got 3,041,024 barrels making a total of 32,088,122 barrels within the period.
However, the Dangote Group said NUPRC has failed to enforce domestic crude supply obligation, adding that it is yet to receive enough supply locally. The company, in a statement by its Group Chief Branding and Communications Officer, Anthony Chiejina, argued that the Petroleum Industry Act mandates local crude oil producers to serve the needs of domestic refineries.
Kachikwu contended that the PIA is not specific on the quantum of crude oil to be allocated to local refiners or that they should depend solely on local producers.
He said: “The PIA was not detailed or specific as to say this is the quantum of crude oil that must be allocated to any one refiner, or did not say that any local refiner must have all the crude oil they require from the Nigeria’s, portion of oil. It was silent on that. “
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He maintained that having such refinery which is the seventh largest in the world, Dangote ought to have secured crude supply contracts some years before the plant came on stream.
To buttress his point about sourcing of crude feedstock for refineries, kachikwu, stated that before the Nigerian government started Kaduna Refinery operations, it went into crude supply contract with Venezuela, and Saudi Arabia.
He said the last administration entered into a lot of loan agreements that involve forward sales of crude oil to the international lenders. As a result of that, he continued, the quantum of oil Nigeria has to meet her domestic requirements of domestic refineries is not it should be.
“Dangote can get oil from any part of the world as long as he has money to pay for the oil, the same for any other refinery in Nigeria.”
He countered claims that there are deliberate attempts by vested interests in the country to sabotage Dangote Refinery.
He said the only solution to resolve the present challenge is the federal government making efforts to increase crude oil production to meet all demands.
READ ALSO: Nigeria’s Crude Oil Production Surges To 1.3mbpd In July
Nigeria’s crude oil production has been dwindling due to challenges of theft, vandalism of pipelines, insecurity around oil facilities, causing disruption of operations.
According to the Organisation of Petroleum Exporting Countries (OPEC), Nigeria’s crude oil production stood at 1.42 million barrels per day (mbpd) in January. It dropped to 1.32mbpd in February and further dropped to 1.23mbpd in March. It however rose marginally to 1.28mbpd in April but dropped again in May to 1.23mbpd . It rose again in June to 1.28mbpd and further increased to 1.307mbpd in July according to OPEC.
However, the output is still below the OPEC quota of 1.50mbpd and 1.78mbd in the 2024 budget.
Victor Ezeja is a passionate journalist with six years of experience writing on economy, politics and energy. He holds a Masters degree in Mass Communication.
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