Fuel price hike: Dangote Refinery says it buys Nigerian crude at global prices

By Johnson Arua

The Managing Director and Chief Executive Officer of Dangote Petroleum Refinery, David Bird, has said fuel prices may not drop significantly despite the refinery operating at full capacity because it purchases crude oil at international market rates.

Speaking during a media chat on Monday, Bird explained that the refinery remains fully exposed to global commodity markets, even under the Federal Government’s crude-for-naira initiative.

According to him, the refinery buys Nigerian crude at international benchmark-related prices and also pays global freight and insurance costs to transport the crude from export terminals to the refinery.

Bird disclosed that Nigerian crude accounts for only about 30 to 35 per cent of the refinery’s total intake, while the remaining volumes are sourced from the international market in U.S. dollars, often passing through several traders before reaching the plant, thereby increasing costs.

He noted that the refinery has processed a variety of crude grades, including West Texas Intermediate as well as supplies from South America, Central America and West Africa.

The CEO acknowledged the hardship faced by consumers but said the company was working to reduce costs across its supply chain.

He also pointed to the volatility in the global oil market, revealing that Brent crude had risen from the mid-$60 range to about $118 per barrel, while tanker freight costs surged from about $800,000 to roughly $3.5 million per shipment.

Despite the challenges, Bird said the refinery was operating at its full capacity of about 650,000 barrels per day, with the potential to increase output to around 700,000 barrels daily, assuring that it would continue to meet Nigeria’s fuel demand even amid global supply disruptions.