• Business - Companies
  • Updated: June 04, 2024

Dangote Refinery faces hurdle as International Oil Companies reluctant to sell crude

Dangote Refinery faces hurdle as International Oil Companies

Nigeria's newly built Dangote refinery, boasting a massive 650,000 barrel per day capacity, is facing a critical challenge according to Aliko Dangote, chairman of the Dangote Group. In a recent interview with CNN, Dangote alleged that international oil companies (IOCs) operating in Nigeria are hesitant to sell crude oil to the domestic refinery.

"The NNPC is doing its best, but some of the IOCs, they are struggling to give us crude, everybody is used to exporting and nobody wants to stop exporting,” he stated.

The business mogul said Africa was not growing because it sells raw materials to the Western world and buys same as finished goods.

“Africa is not going the way it should because we export raw materials and import finished goods. It doesn’t matter what it is, even if it is gold or whatever, raw material is always priced at a ridiculous amount compared to finished goods,” Dangote said.

This reported reluctance from IOCs throws a spotlight on Nigeria's current oil industry dynamics. Dangote suggests that these companies prioritize exporting crude for foreign exchange, potentially hindering the domestic refining industry's growth. This aligns with Nigeria's historical dependence on crude exports, which Dangote argues has stifled Africa's economic development. He emphasizes the need to move away from exporting raw materials and focus on value addition through domestic refining.

The Nigerian National Petroleum Company (NNPC) has reportedly stepped in to address the feedstock issue for the Dangote refinery. However, Dangote's comments raise questions about the long-term viability of relying solely on NNPC to supply crude.

This situation could have significant implications for Nigeria's oil sector. If IOCs remain unwilling to sell crude domestically, it could dampen the potential of the Dangote refinery and hinder the country's ambitions for self-sufficiency in refined petroleum products.

Whether Dangote and the NNPC can convince IOCs to prioritize domestic crude sales or alternative solutions emerge will be key factors determining the success of Nigeria's domestic refining efforts.

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