LAGOS, Nigeria – As escalating Middle East tensions trigger a global energy scramble and send crude prices soaring, the Dangote Petroleum Refinery has reaffirmed its role as Nigeria’s primary shield against international supply shocks.
Despite a massive 26% surge in global Brent crude prices, the refinery has moved to cushion the domestic market by absorbing a significant portion of rising costs, ensuring that the Nigerian public is not hit with the full weight of global volatility.
The international landscape is increasingly grim: refinery shutdowns are rising, and major players like China have slapped bans on gasoline and diesel exports.
While these factors have tightened global supply, Dangote Refinery officials state that their priority remains the Nigerian consumer.
To manage the current crisis, the refinery implemented a measured 12% adjustment (N100 per litre) to its ex-depot price for Premium Motor Spirit (PMS).
Crucially, the refinery is absorbing 20% of the recent cost escalation to prevent a price spiral at the pumps, even as it continues to purchase crude at high international market rates.
Operating a world-class refinery in a deregulated market comes with steep financial hurdles.
Currently:
Premium Pricing: Nigerian crude often trades at a $3 to $6 premium over Brent.
Logistics: With freight costs added, crude lands at the refinery between $88 and $91 per barrel, up from just $68 when the ex-depot price was N774/litre.
Supply Gaps: While NNPC provides five cargoes monthly in Naira, the refinery requires 13 cargoes to meet total Nigerian demand.
The deficit must be sourced from international traders using foreign exchange at open market rates.
Furthermore, the refinery noted that local upstream producers have yet to meet the supply requirements mandated under the Petroleum Industry Act (PIA), forcing the facility to rely on more expensive international middlemen.
To further drive down costs for Nigerians, Dangote is pivoting toward logistics efficiency.
This month, the refinery will begin rolling out a fleet of Compressed Natural Gas (CNG)-powered trucks.
This move is designed to: Lower logistics costs across the downstream sector, improve delivery timelines for nationwide distribution, and reduce dependence on expensive diesel for transport.
“Selling below cost would undermine our ability to procure crude and sustain production,” the refinery stated in a commitment to transparency.
“However, by refining locally, we moderate FX demand and protect Nigeria from the severe shortages currently plaguing the global market,” It added.
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