The Chief Executive Officer of Dangote Petroleum Refinery, David Bird, has said the refinery buys Nigerian crude oil at international market prices, a development that continues to influence the cost of refined fuel products in the country.
Speaking during a media chat on Monday, Bird explained that the refinery is fully exposed to global commodity markets. According to Punch, he noted that even under the crude-for-naira arrangement, Nigerian crude is still purchased at international benchmark-linked prices.
“We purchase Nigerian crude from the government at international benchmark-related prices and also pay international freight and insurance costs to move the crude from export terminals to the refinery,” he said.
Bird added that Nigerian crude accounts for about 30 to 35 percent of the refinery’s feedstock, while the remaining volumes are sourced from the international market in US dollars.
He added that domestic refining has strengthened Nigeria’s fuel supply security, helping the country avoid the persistent shortages and queues that were common when it relied heavily on fuel imports.
“I fully acknowledge the pain that is being suffered. We are seeing that and doing what we can to minimise costs throughout our supply chain,” Bird said.
He noted that volatility in the global oil market has pushed costs higher, with recently surging to around $118 per barrel, while tanker freight costs jumped from about $800,000 to roughly $3.5 million per shipment.
The refinery is currently operating at about 650,000 barrels per day, with the capacity to increase output to around 700,000 barrels per day, as it continues to supply fuel to the Nigerian market despite global supply disruptions.