The recent crude oil supply crisis in Nigeria has raised significant concerns among industry operators, who warn that it may lead to a decline in investments within the sector. On Wednesday, operators from the Lagos Chamber of Commerce and Industry (LCCI) expressed fears that the crisis could erode the confidence of International Oil Companies (IOCs) and potential investors in local refineries.
The warning comes in the wake of a fire incident at the Dangote Petroleum Refinery, which has a capacity of 650,000 barrels per day. The fire, which occurred on Wednesday, quickly went viral on social media, sparking widespread concern. The refinery management assured the public that the fire was under control and no one was injured.
The LCCI urged the Federal Government to take swift action to address the issues surrounding crude supply contracts, high local crude costs, and logistics expenses. Chinyere Almona, the Director-General of LCCI, highlighted the need for transparency and quick resolution to prevent blackmail and victimization of both IOCs and local refiners. Almona’s comments followed accusations from a Dangote Petroleum Refinery official who claimed that IOCs were deliberately frustrating the refinery by inflating crude prices above international rates.
The crisis has also prompted modular refinery operators to seek intervention from Wale Edun, the Minister of Finance and Coordinating Minister for the Economy. They argue that the unresolved supply issues could deter further investment in the oil sector.
Almona emphasized that the government needs to provide a detailed report on the current issues and proposed solutions. This transparency is crucial to maintaining investor confidence in Nigeria’s oil and gas sector. She pointed out that the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) must demonstrate its ability to protect investor interests.
Segun Kuti-George, National Vice President of the Nigerian Association of Small-Scale Industrialists, also voiced concerns about the ongoing supply issues. He noted that the inability of local refineries to process Nigerian crude oil, leading to reliance on imported refined products, is illogical and detrimental to the country’s economy.
On Monday, Devakumar Edwin, Vice President of Oil and Gas at Dangote Industries Limited, accused IOCs of sabotaging the refinery by demanding excessive premiums or claiming unavailability of crude. He suggested that this was a tactic to ensure Nigeria remains reliant on imported refined products, benefiting foreign economies at Nigeria’s expense.
The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) denied these claims, asserting that no “dirty fuel” is being imported into Nigeria. Ogbugo Ukoha, Executive Director of NMDPRA, confirmed that the last instance of high-sulfur fuel importation occurred in February and has since been addressed.
The LCCI called for further negotiations to resolve pricing and supply contract issues. Almona stressed the importance of creating an environment where IOCs and local refiners can operate profitably, thereby fostering job creation and revenue generation.
Modular refinery operators, represented by the Crude Oil Refinery Owners Association of Nigeria (CORAN), also called for clear government policies to support local refining efforts. They emphasized the need for government backing to ensure the success of local investments in the refining sector.
The recent fire at the Dangote refinery, although minor, has added to the tensions. Anthony Chiejina, Group Chief Branding & Communications Officer at Dangote Industries Limited, confirmed that the fire was contained and operations continue as normal.
Despite the incident, the refinery’s quick response to the fire was commended by industry players. Olufemi Adewole, Secretary of the Depot and Petroleum Products Marketers Association of Nigeria, highlighted the importance of ongoing safety measures to prevent such incidents.
The Lagos State Fire and Rescue Service reported that it was unaware of the incident, as no distress call was received from the refinery.