Former Presidential candidate under the African Democratic Congress, Dumebi Kachikwu, has said that no refinery in the world solely depends on domestic crude supply to run its operations.
Kachikwu said this on Arise TV as the Dangote Refinery, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian National Petroleum Company Ltd debate over feedstock supply to the 650,000 barrels per day refinery.
Section 109 of the Petroleum Industry Act, 2021 provide for the regulator to allocate crude oil to local refiners, but it provides a ‘willing buyer, willing seller’ clause.
Between January and June this year, the NUPRC said it has facilitated the supply of 32 million barrels of crude oil to local refineries out of which Dangote Refinery got over 29 million barrels.
Some Nigerian experts believe that Dangote allegedly did not make adequate arrangements with International Oil Companies for feedstock.
The former presidential candidate explained that no refinery in the world rely on domestic supply to run their business.
Kachikwu said, “I think that Nigerians need to be better informed and have a better understanding of the whole situation. When you speak about the PIA and that local refineries must have access to Nigeria’s portion of the crude oil, the PIA was not detailed or specific as to say this is the quantum of crude oil that must be allocated to any one refiner or did not say that any local refiner must have all the crude oil they require from Nigeria’s portion of the crude oil.
“And if you understand how the oil business works on refining, you know that there’s no refinery in the world that depends solely on domestically produced crude oil.
“You will also be surprised to know that all over the world, there are nations that don’t have oil but have refineries. I’ll tell you this, out of the top seven refineries in the world, two of the biggest refineries in the world are in South Korea. South Korea has no proven reserves of oil. Singapore exports petroleum products.They have no proven reserves. So, the refinery business is such that people get their crude oil from any part of the world where they have good contracts.”
The former presidential candidate explained that from 2018 to 2022, the United States was the largest oil producer in the world.
However, refiners import crude oil from all over the world through supply agreements with IOCs.
“So I don’t think we are on the right path when we make this whole issue about government, NUPRC, NNPC not giving Dangote enough crude oil. I believe that this matter got into the public space. Sentiments entered and it’s been blown out of proportion,” he said.
Dangote Refinery is the biggest single-train refinery but Kachikwu said the management should ought to have planned or forecasted properly.
“You ought to have four years before have your contracts in place. I will tell you this, the Kaduna refinery, before they started it, the Nigerian government entered into contracts with Venezuela and Saudi Arabia. They were buying crude oil from those countries,” he said.
He dismissed the claims that Dangote Refinery was being sabotaged by the government, adding that Nigeria had entered forward sales agreement.
Kachikwu explained, “Every year, NNPC gives out contracts to several marketers or refineries from all over the world, promising them crude, and they pay upfront for that crude. So, they are expected to get crude oil out of season piecemeal.
“What I understand is happening is that they’ve gone outside of this to say we have some crude oil and we’re giving this to Dangote, to Port Harcourt Refinery that I understand is coming downstream, they’re testing right now to Warri, to Walter Smith, and to the other refineries.
“So I don’t think there’s anybody out to sabotage Dangote refinery. Let me tell you my personality on this. Dangote has operated in a space for the longest time in the food sector where he’s akin to being a monopoly.”