Rising volatility in global crude markets and logistics costs means fuel prices may remain high even as Nigeria’s largest refinery operates at full capacity, according to the leadership of the country’s newest refining giant.
The Managing Director and Chief Executive Officer of the Dangote Petroleum Refinery, David Bird, explained during a media briefing on Monday that the refinery’s pricing structure is heavily influenced by global commodity market forces, making it difficult for domestic pump prices to decline significantly in the near term.
Bird said it was important for the public to understand that the refinery is not insulated from international market dynamics. Even under the government-backed crude-for-naira arrangement, he noted, crude oil is still purchased at prices tied to global benchmarks.
According to him, the refinery buys Nigerian crude from the government at international benchmark-related rates, while also paying global freight and insurance costs to transport the crude from export terminals to the facility.
“Even under the crude-for-naira programme, the pricing still reflects international market benchmarks,” he said, stressing that the refinery remains fully exposed to the global commodities market.
Limited Local Crude Supply
Bird disclosed that Nigerian crude accounts for only about 30 to 35 percent of the refinery’s total crude intake. The remaining volume is sourced from international markets and paid for in US dollars, often through a chain of traders before reaching the refinery.
He explained that the involvement of multiple intermediaries tends to increase the cost of acquiring crude, adding premiums to the overall processing expense at the refinery.
The refinery, he added, processes a range of crude grades sourced globally, including the benchmark West Texas Intermediate as well as crude from South America, Central America and parts of West Africa.
Volatile Global Market
Bird highlighted the dramatic swings in global oil prices as a key factor affecting refined fuel costs.
He said the price of Brent crude, which had hovered around the mid-$60 per barrel range about a week earlier, had surged to roughly $118 per barrel within a short period. At the same time, the cost of shipping crude oil had spiked significantly, with tanker freight rates climbing from about $800,000 per shipment to nearly $3.5 million.
These sharp increases, he noted, have intensified cost pressures for refineries and fuel-importing nations alike.
Efforts to Reduce Supply Chain Costs
Despite the global pressures, Bird acknowledged the financial strain on consumers and said the refinery was working to minimise costs wherever possible across its supply chain.
He stressed that domestic refining had nonetheless improved Nigeria’s energy security by ensuring a steady supply of fuel even during periods of global market disruption.
Talking points from the refinery, shared by the Dangote Group on its official social media platform, also emphasised that local refining had helped Nigeria avoid the fuel shortages and long queues that previously accompanied global supply shocks.
The refinery currently operates at its full nameplate capacity of about 650,000 barrels per day and has the potential to scale up to around 700,000 barrels daily, Bird said. He added that the facility remained committed to meeting Nigeria’s domestic fuel demand despite the challenging global market environment.
Fresh Increase in Petrol Price
The remarks came shortly after the refinery raised the gantry price of Premium Motor Spirit (PMS) to N1,175 per litre, up from N995 per litre announced just three days earlier.
The N180 increase—representing roughly an 18 percent jump—marks the third price adjustment within a week. Gantry prices had climbed from N774 per litre the previous week.
Across several states, retail pump prices have already crossed the N1,000-per-litre mark, with some filling stations reportedly selling petrol for as much as N1,200 per litre.
The rapid adjustments reflect the continued influence of global market forces on domestic fuel pricing, even as Nigeria expands its local refining capacity.