The clarification followed recent data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), which showed that the refinery did not take up about 15.5 million barrels of crude offered by local producers during the second quarter of 2026.
According to the refinery, however, the figures should not be interpreted as a rejection of crude supplies simply because volumes were listed as being offered under the Domestic Crude Supply Obligation (DCSO) framework.
It explained that the key issue was whether the crude was genuinely available to the refinery in sufficient quantities and at prices that were commercially viable for sustained domestic refining operations.
In a statement issued late Tuesday, the Group Vice President, Oil & Gas and Fertiliser, Dangote Industries Limited, Devakumar Edwin, said the refinery remained committed to purchasing Nigerian crude and supporting the DCSO framework.
Edwin, however, said the refinery had encountered considerable difficulties in obtaining crude directly from Nigerian upstream producers since the implementation of the DCSO arrangement.
“As a result, a substantial portion of the crude allocated under the arrangement has had to be sourced through International Oil Companies and third parties rather than directly from Nigerian upstream producers,” Edwin said.
Third-party costs
According to Edwin, the involvement of intermediaries in crude transactions frequently adds premiums and other transaction-related expenses to the cost of crude supplied to the refinery.
He argued that these additional charges could push the price of Nigerian crude beyond internationally recognised market benchmarks, including those published by pricing agencies such as Platts and Argus.
“This process often introduces additional premiums and transaction costs that can drive crude prices above internationally recognised benchmarks published by agencies such as Platts and Argus. In many cases, this has made domestically sourced crude less competitive than alternative supplies available on the international market,” he said.
The development is significant for the domestic refining sector, particularly as Nigeria continues to seek greater utilisation of locally produced crude to support domestic refining and reduce dependence on imported petroleum products.
Edwin maintained that the refinery was prepared to purchase crude from Nigerian producers, provided the volumes were adequate and the prices remained competitive with prevailing international market conditions.
“Our position is straightforward. We are ready and willing to purchase Nigerian crude oil, provided it is available in sufficient volumes and at competitive market prices. Like every refinery, we must procure crude that supports sustainable operations and value creation.
“This is essential to maintaining the economics of domestic refining and enabling us to deliver petroleum products to Nigerians at affordable and competitive prices,” he said.
Impact on fuel prices
The Dangote refinery executive further warned that higher crude acquisition costs could ultimately affect the price of refined petroleum products in Nigeria.
He explained that where crude passes through several layers of intermediaries, the resulting premiums increase the refinery’s operating costs and weaken the economics of domestic processing.
“When additional layers of intermediaries introduce premiums, the cost of crude acquisition increases significantly, affecting the overall economics of domestic refining.
“Ultimately, higher crude costs translate into higher costs of refined petroleum products for the local market,” Edwin added.
NUPRC data
The refinery’s clarification comes against the backdrop of fresh NUPRC figures showing a substantial increase in the volume of crude supplied to Nigerian refineries in the second quarter of 2026.
The commission reported that local refineries received approximately 53.7 million barrels of crude during the period, raising questions over the refinery’s reported rejection of some of the crude allocated under the DCSO framework.
The Dangote refinery’s explanation suggests that the headline volume of crude offered does not necessarily reflect the quantity that was commercially viable for the facility to purchase.
The company has maintained that its preference is to source crude directly from Nigerian producers, but that pricing, availability and the terms attached to supply remain critical considerations.
The dispute also revives longstanding tensions between the refinery and some IOCs over crude supply. The refinery has in the past accused some international oil companies and government agencies of frustrating its operations by denying it access to adequate domestic crude supplies.
The latest statement therefore adds another dimension to the debate over the implementation of the DCSO, which was designed to ensure that Nigerian crude producers supply a portion of their output to domestic refineries.
For the policy to achieve its intended objective, however, the Dangote refinery is insisting that domestic crude must not only be allocated on paper but also made available in sufficient quantities and at prices that allow local refining to remain commercially sustainable.
The refinery’s position comes at a time when Nigeria is increasingly looking to large-scale domestic refining to strengthen energy security, reduce petroleum product imports and retain more value from the country’s crude oil resources.