Reps to probe alleged IOC plot against Dangote Refinery

The House of Representatives on Thursday said it will investigate claims that International Oil Companies (IOCs) are attempting to undermine the operations of the Dangote refinery.

The decision of the House followed a matter of urgent national importance raised by Minority Leader, Kingsley Chinda, who expressed concern over potential manipulation of local crude oil prices.

The manipulation, he argued, could prevent the Dangote refinery from purchasing crude locally, thus inflating the cost of refined products.

The lawmakers also plan to scrutinise the actual percentage of the Federal Government’s shares in the Dangote refinery.

Chinda pointed out that Dangote stated Nigeria owns only 7.3% of the refinery, contrary to the Federal Government’s claim of 20%, due to the government’s failure to meet its obligations.

The House urged the Ministry of Petroleum Resources to intervene to ensure the refinery’s success for the benefit of the nation.

Recall that on Wednesday, the refinery’s management accused IOCs of obstructing its operations by insisting on selling crude oil through their foreign agents. The refinery claimed that this practice leads to higher local crude prices, with cargoes offered at a $2 to $4 premium above the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) official price.

Dangote Industries Limited’s Vice President of Oil & Gas, DVG Edwin, praised the NUPRC for its efforts to assist with crude supply requests and for publishing the Domestic Crude Supply. However, he criticised foreign oil producers for prioritising sales to Asian countries, thus driving up local crude prices.

Edwin provided an example of inflated costs, noting that in April, the refinery paid $96.23 per barrel for a cargo of Bonga crude, which included premiums from NNPC and traders. This price was significantly higher than other market prices tracked by platforms like Platts and Argus.

“As an example, we paid $96.23 per barrel for a cargo of Bonga crude grade in April (excluding transport). The price consisted of $90.15 dated Brent price + $5.08 NNPC premium (NSP) + $1 trader premium.

“In the same month, we were able to buy WTI at a dated Brent price of $90.15 + $0.93 trader premium including transport.

“When NNPC subsequently lowered its premium based on market feedback that it was too high, some traders then started asking us for a premium of up to $4m over and above the NSP for a cargo of Bonny Light,” he revealed