The Independent Petroleum Producers Group (IPPG) has expressed strong opposition to any attempts to mandate the sale of crude oil to the Dangote Refinery and other local refineries in Nigeria. In a letter addressed to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) on August 16, 2024, IPPG Chairman Abdulrazak Isa emphasized that such a move would conflict with the “willing buyer, willing seller” framework established by the Petroleum Industry Act (PIA) of 2021.
The group urged the Nigerian National Petroleum Company Limited (NNPC) to redirect its allocated 445,000 barrels per day (bpd) of crude oil towards local refineries to address the current supply shortages affecting domestic production. Isa highlighted that this allocation, traditionally reserved for domestic consumption, should be utilized under a price hedge mechanism with financial institutions like Afrexim Bank, allowing refiners to meet local demand while adhering to market principles.
Isa also stressed that any surplus national production beyond the 445,000 bpd should be treated as export volumes, in line with international market practices. He criticized recent approaches by Dangote Refinery, which sought crude supply nominations from IPPG members for October, arguing that such methods could impose unfair obligations on producers.
The IPPG emphasized that while it supports efforts to boost domestic refining capacity, no private sector entity should be pressured into arrangements that effectively subsidize others within the oil and gas value chain. The group called for transparency in the crude allocation process and requested the NUPRC to clarify the criteria and methodology used in determining allocations, which appear to favor refinery demands over actual local consumption needs.
This tension arises amidst ongoing disputes between Dangote Refinery and international oil companies (IOCs), with the refinery accusing IOCs of obstructing crude supply by insisting on sales through foreign agents. The Dangote Group also denied claims by NUPRC that it had facilitated the supply of 29 million barrels of crude oil to the refinery between January and June 2024.
