What is really holding Dangote refinery — LCCI

The Lagos State Chamber of Commerce and Industry (LCCI) has identified oil theft and pipeline vandalism as significant factors contributing to the inadequate supply of crude oil to the Dangote Refinery and other local refineries.

This was disclosed by LCCI’s Director General, Dr. Chinyere Almona, in a recent statement addressing the poor crude oil supply to local refineries in Nigeria.

In a recent interview with CNN, Aliko Dangote, Chairman of Dangote Refinery, highlighted the challenges faced by International Oil Companies (IOCs) in supplying crude oil to local refineries. Dangote noted that IOCs prefer exporting crude oil to earn foreign exchange, posing a challenge for local supply.

“The NNPC is doing its best, but some of the IOCs are struggling to give us crude. Everybody is used to exporting, and nobody wants to stop,” Dangote told CNN.

Reacting to this situation, Almona pointed out that oil theft, pipeline vandalism, and policy issues are major hindrances to the consistent supply of crude to local refineries.

“The issue of oil theft, pipeline vandalism, and policy concerns, among others, are all contributory factors,” Almona stated.

“The issue of IOCs supplying crude oil to Dangote Refinery is a subject of our ongoing conversations around what information is in the public, and our preliminary engagements with some parties.”

Almona confirmed that, based on public information from the Dangote Group, some IOCs have been supplying crude to the Dangote Refinery. She acknowledged the government’s efforts in ensuring crude supply to Nigerian refineries, including Dangote’s Refinery, but urged further action from relevant authorities.

“We call on the Nigerian Petroleum Corporation Company Limited (NNPCL) and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) to do more in granting a soft landing to the new refinery if there are any issues around pricing and supply contracts between the two parties,” Almona added.

Despite Nigeria’s daily production of 1,281,478 barrels of crude oil (excluding condensates), Dangote Refinery has had to look to the US for crude supply. Industry experts have attributed the slow commencement of fuel production at the Dangote Refinery to the lack of adequate crude supply.

The refinery began producing diesel and aviation fuel in January 2024, months after its commissioning in May 2023. As the situation unfolds, stakeholders continue to seek solutions to ensure a steady supply of crude to support local refinery operations and enhance Nigeria’s energy sector.