Dangote Refinery ramps up fuel exports as crude shortages, forex squeeze bite

By UdemeAkpan, Energy Editor

The Dangote Petroleum Refinery has significantly increased exports of refined petroleum products as inadequate domestic crude oil supply and persistent foreign exchange constraints continue to hamper its operations.

This comes as rising global crude oil prices are expected to increase feedstock costs for the 650,000-barrels-per-day refinery, although stronger prices for refined petroleum products are providing some support for refining margins.

Checks by Vanguard showed that crude oil supply to the refinery under the Federal Government’s naira-for-crude arrangement has declined sharply, compelling the refinery to source a larger share of its feedstock from the international market.

The investigation also revealed that although the refinery continues to sell petroleum products in naira to support the domestic market, it has been unable to convert a significant portion of its naira proceeds into U.S. dollars needed to procure crude oil from international suppliers.

Confirming the development in a telephone interview with Vanguard, the Group Vice President, Oil & Gas, Dangote Industries Limited, Engr. Devakumar Edwin, said: “We are operating at full capacity and exporting part of our production because we are receiving very little crude under the naira-for-crude arrangement.

“Although the management took a major risk to support the country by continuing to sell petroleum products in naira, we have been unable to convert those naira proceeds into U.S. dollars. While dollars are being made available to importers of petroleum products, we have been unable to access the foreign exchange we need.”

The situation comes against the backdrop of rising international crude oil prices.

Latest market data showed that Brent crude, the international benchmark against which much of Nigeria’s crude is priced, rose by 0.24 per cent to $89.43 per barrel. West Texas Intermediate (WTI) crude gained 0.42 per cent to $82.83 per barrel, while Murban crude climbed 2.47 per cent to $83.78 per barrel. The OPEC Basket also appreciated by 0.94 per cent to $84.17 per barrel.

Meanwhile, gasoline futures edged up to $3.391 per gallon, reflecting sustained demand for refined petroleum products in the international market.

The rally in crude prices has been driven largely by heightened geopolitical tensions in the Middle East, raising concerns about possible supply disruptions.

For the Dangote Refinery, which processes both Nigerian and imported crude oil, higher international crude prices translate directly into increased feedstock costs, as crude accounts for the largest component of refining expenses.

The post Dangote Refinery ramps up fuel exports as crude shortages, forex squeeze bite appeared first on Vanguard News.