The 650,000 barrels per day facility in Nigeria has received reduced crude oil supplies under the local currency crude sales agreement with the federal government, forcing management to ship more finished products abroad.
To maintain production levels, the refinery has been purchasing raw crude from international suppliers. However, selling finished fuel locally in naira has made it difficult for the refinery to secure the foreign exchange needed to pay international suppliers for raw oil deliveries.
Impact on local operations and crude supply
Rising international crude oil prices have also increased the cost of purchasing raw material for oil refiners worldwide.
Benchmark prices show raw crude trading at $89.43 per barrel, West Texas Intermediate at $82.83 per barrel, Murban crude at $83.78 per barrel, and the OPEC Basket at $84.17 per barrel, alongside rising gasoline futures at $3.391 per gallon.
Global geopolitical tensions in key producing regions continue to push raw oil prices higher, increasing operational costs for the facility.
These financial pressure points have forced the plant to rely more on export sales to earn foreign currency needed for ongoing operations.
Executive remarks on operational changes
The group vice president of oil and gas at Dangote Industries Limited, Devakumar Edwin, in an interview with Vanguard, stated that:
“We are operating at full capacity and exporting part of our production because we are receiving very little crude under the naira-for-crude arrangement.”
Source: Africabusinessinsider