At the backdrop of the recent controversy between Dangote Refinery and Pinnacle Oil & Gas Limited over petroleum products imports and distribution, it is now revealed that the two companies have existing agreement over the operation of the Pinnacle Oil’s product distribution terminal at the Lekki free zone area.
Making this disclosure yesterday in Lagos, the Managing Director of Pinnacle Oil, Mr Robert Dickerman, said his company had built a terminal in Lekki Free Zone at great expense for the benefit of far greater efficiency in the distribution of petroleum products throughout Nigeria with the cooperation of Dangote Group in a 13-year agreement, wondering why Dangote would turn round to allege that the facility was set up to undermine the refinery.
Earlier this week Dangote Refinery had accused Pinnacle Oil of involvement in importation and distribution of substandard petroleum products to the detriment of its locally refined products.
But Dickerman stated: “In our effort to further enhance distribution efficiency, we proposed and invested in pipelines to distribute petroleum products from the Dangote Refinery, as pipeline transfer is far less costly than distribution by ship or trucking across the country.
“When we proposed this project to Dangote, they wholeheartedly agreed and signed a 13-year interconnection agreement with us.
“In addition, Dangote facilitated our process of achieving regulatory approval by writing two Letters of No Objection to the regulator to enable our project to proceed”.
Recommending a free market principle for Nigeria’s petroleum market, Dickerman said, “It is Pinnacle’s firm position, as well as the position of any educated economist or market watcher, that the optimal solution to Nigeria’s energy security and pricing is a market-based solution that encourages all sources of supply, be they from local refineries, imports or any other source. “These suppliers must adhere to the strict specifications of the market and product must be handled safely. But the consumer should be indifferent to the source of supply, as long as the product is good quality,and the price is the lowest attainable. This solution demands competition”.
Prior to the Pinnacle terminal, all imported cargo had to be transferred to smaller vessels due to the shallow draft restrictions across Nigerian ports.
Industry experts say this extra vessel charter, along with the associated costs of delay, has been inflating the delivered cost for many years.
Dickerman said that with the Pinnacle terminal, full cargoes can offload in less than 40 hours and sail away without any ship-to-ship transfer or delays.
According to him this has been working extremely well for the country since operations began in 2021.
He added, “the Dangote Refinery would be well advised to utilize this system and help keep prices at market levels, so the entire industry can avoid supply disruptions and price shocks. There is no need or desire to re-create the distribution network where every truck must load at one point for the entire country”