Oil producers bearing the name: Independent Petroleum Producers Group, IPPG, have said that they are not under any obligation to sell crude oil to Dangote Refinery.
Dangote Refinery has been in the news in recent time.
It started with the African richest man, Aliko Dangote throwing tantrums, saying that International oil companies, IOC, refused to sell crude oil to his refinery directly and in naira.
What followed was that the Chief Executive Officer of Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Farouk Ahmed, made condemnatory remarks about the refinery and its products.
The ensuing face-off led to President Bola Tinubu’s intervention with the President directing the Nigerian National Petroleum Company Limited to sell crude oil to the 650,000-capacity refinery and other upcoming refineries in Naira.
The latest news is that oil producers under the aegis of IPPG, said they cannot be forced to sell to the African richest man’s refinery.
Instead, the oil traders urged NNPCL to re-direct its allocated crude oil volumes to Dangote Refinery and other local refineries.
This, they said, in a statement their Chairman, Abdulrazak Isa signed.
The letter, which they addressed to the Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission, Gbenga Komolafe, read, “Historically, NNPC has always had an intervention crude oil volume (445kbopd) meant to satisfy the nation’s domestic consumption. This volume has always been used, under various swap mechanisms, to import refined products for domestic consumption.
“Since there is now domestic refining capacity to meet consumption, this dedicated volume should be reserved for all domestic refineries under a price hedge mechanism that can be provided by a suitable financial institution such as Afrexim Bank.”
“…While we fully support and commend the efforts of Nigerian entrepreneurs to enhance domestic refining capacity, it is important that no private sector business is unduly pressured into arrangements that may effectively subsidise another within the oil and gas value chain under any guise whatsoever.
“Under this willing-buyer, willing-seller framework, it is essential for refiners to negotiate and execute long-term crude oil Sales and Purchase Agreements with producers and their marketing agents. These agreements should follow industry best practices, with typical tenures ranging from one to five years.”
