Dangote Refinery, others seek 597,700 bpd of oil. Producers supplied less than a third of demand for two reasons

Tuesday, 13 August 2024 04:55

Dangote Refinery, others seek 597,700 bpd of oil. Producers supplied less than a third of demand for two reasons

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Dangote Refinery, others seek 597,700 bpd of oil. Producers supplied less than a third of demand for two reasons

Nigerian refineries including the Dangote Refinery have raised their domestic crude requirements for the second half of 2024 to 597,700 barrels per day from 483,000 bpd in the first half, the national oil regulator said, despite tight domestic supply.

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) was only able to help secure 177,777 bpd from oil producers in the first six months of the year, way below what the refiners had asked for, it said in a statement released on Friday.

The refineries' rising crude requirements and oil producers' struggle to meet demand has put the 650,000-bpd Dangote Refinery in particular at odds with the regulator.

Dangote Refinery has accused the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) of failing to enforce a law that requires oil producers to supply domestic refiners, saying in a statement on Friday that lax enforcement was raising its operational costs.

The refinery, which is the largest in Africa, says it is having to increase crude imports due to the insufficient domestic supplies and this could impact its ambitions this year and its long-term prospects.

The NUPRC said oil producers could not satisfy the demands because some had operational challenges while others pledged most of their output to traders who financed drilling. It also said forcing them to raise their supply would violate their contracts.

In its statement on Friday, the regulator also projected national average crude oil production of 1.7 million bpd by December 2024, higher than the 1.57 million bpd it projected for January through July, which producers did not meet.

"This comprehensive data provides insight into the projected crude oil needs for the refineries, crucial for understanding the energy landscape in Nigeria for the second half of 2024," Gbenga Komolafe, head of the NUPRC said in the statement.

NUPRC data showed that eight refineries are expected to be operational from August, with a total refining capacity of 864,500 bpd, meaning that oil producers would be required to supply over half that.

A total of 52 oil producers, including majors TotalEnergies, Chevron, Shell and ExxonMobil will supply the crude, mainly from their joint venture operations with Nigerian state oil firm, the NNPCL.

Reuters