Oil Marketers Strike Deal with Dangote for Daily Supply of 28m Litres of Petrol
· Agree to cease imports based on availability of sufficient local refining
· Refinery reduces price per litre of petrol to N970 from N990
· Ramps up export of products to Iceland, S’Korea, London, others
Oil marketers at the weekend struck a deal with the $20 billion Dangote refinery for the supply of at least 28 million litres of petrol daily in the next six months for domestic consumption.
The development came amid an announcement by the refinery that it had cut ex-depot petrol price from N990 per litre to N970 per litre, saying it is its own way of thanking Nigerians for their support.
A stakeholders’ meeting at the weekend in Abuja resolved that oil marketers will henceforth cease importation of products. It stressed that if they must bring in new stock, it would be dependent on the unavailability of products from Dangote refinery.
Confirming the new agreement in a statement in Abuja, petrol retailers under the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), said the deal was expected to bring succour to Nigerians.
A release by the organisation’s spokesman, Dr Joseph Obele, said other stakeholders that signed the deal included Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Nigerian National Petroleum Company Limited (NNPC), and Edo Refinery.
Others were Dangote Refinery, Waltersmith Refinery, Aradel Refinery, and Independent Petroleum Marketers Association of Nigeria (IPMAN), among others.
The oil and gas sector players said henceforth they would purchase all their petroleum products from Dangoted refinery located in the outskirts of Lagos. They lauded all stakeholders that contributed to the agreement.
“The resolution includes Dangote refinery guaranteeing to sell an average of 28,000,000 litres of Premium Motor Spirit (PMS) daily for the next six months to oil marketers for domestic consumption in the Nigerian market,” PETROAN stated.
It quoted National President of PETROAN, Dr Billy Gillis-Harry, as expressing the view that the resolution will bring succour to the downstream sector and improve the Nigerian economy.
It added that the resolution will attract many benefits, including stability of petroleum products supply, control of price fluctuations, transparent communication, addressing of conflicts proactively, and fostering of collaboration among key players.
According to the new deal, the availability of aviation fuel and diesel from all domestic refineries would be afforded NMDPRA for the same period of six months and must be subject to consideration for import as may be required.
The downstream regulator, NMDPRA, it was learnt, must also establish the basis for allocating import volumes to oil marketing companies on the assumption of the aggregate of domestic refineries’ capacity, with the understanding to cover shortfalls for respective marketers.
PETROAN said with the resolution, the domestic refineries would provide fixed quantities and delivery windows, which must be a period of two months preceding the month of delivery to the customer and NMDPRA.
Besides, individual oil marketing companies were to enter direct commercial agreements with domestic refineries on a willing buyer and willing seller basis, the petrol retailers added.
There had been a back and forth between the government, the management of Dangote refinery, oil marketers, and other stakeholders, as some downstream industry players previously raised concerns about Dangote refinery’s capacity to reliably supply the market and maintain consistent distribution across Nigeria’s expansive network.
Marketers also questioned whether the refinery’s production and logistic systems were adequately prepared to handle the country’s fluctuating demand, a poser that Dangote had now dispelled as unnecessary.
Dangote petroleum refinery, also yesterday, announced that it had effected a reduction in the prevailing price of its PMS from N990 per litre to N970 per litre for the oil marketers.
A statement signed by the company’s Group Chief Branding and Communications Officer, Anthony Chiejina, said the price reduction was part of its plans to lessen the burden of Nigerians, who had supported the company over the years.
Dangote said in the statement, “As the year comes to an end, this is our way of appreciating the good people of Nigeria for their unwavering support in making the refinery a dream come true. In addition, this is to thank the government for their support as this will complement the measures put in place to encourage domestic enterprise for our collective wellbeing.
“While the refinery would not compromise on the quality of its petroleum products, we assure you of best quality products that are environmentally friendly and sustainable.
“We are determined to keep ramping up production to meet and surpass our domestic fuel consumption, thus dispelling any fear of a shortfall in supply.”
In the meantime, a report by S&P Global Commodity Insights indicated that Dangote refinery had successfully exported its jet fuel to various international destinations, including South Korea, as well as airports in Iceland, Tenerife, and London.
With its aviation fuel now also used in Heathrow Airport in the UK, S&P stated that Dangote’s petrochemical facility had continued to scale up production.
It emphasised that between January and October this year, the majority of the refinery’s supply was delivered to the Lome transhipment hub, Togo, with South Korea emerging the largest single export destination and receiving 23,000 bpd of naphtha.
Besides, significant volumes of gasoil were exported to Ghana and other West African nations from the facility, the report added.
It stated that at least eight African countries were gearing up to import Dangote refinery’s products, when it achieves full operational capacity next year, thereby positioning Nigeria as a net exporter of jet fuel, naphtha, and fuel oil.
According to the report, Nigeria can export almost 50,000 bpd more gasoil from Lagos than it would import by next year, with volumes expected to almost triple by 2026.
S&P stated, “From January to October this year, the refinery has delivered the majority of its supply to the Lome transshipment hub off Togo, while South Korea has emerged as its single-largest export location, drawing 23,000 BPD of naphtha.
“Large volumes of gas oil have flowed to Ghana and other West African countries, while for the first time in history, Nigerian-made jet fuel has found its way to airports ranging from Iceland to Tenerife and London’s Heathrow.”