*Demands transparent allocation framework
By Abiodun Folarin
WorldStage– The Chief Executive Officer of the Dangote Refinery, David Bird, has called for greater transparency in the methodology used by the Nigerian government to allocate crude oil, warning that current supply levels are falling short of agreed terms.
Speaking as a guest on Arise Morning Show on Wednesday, he noted that the refinery requires between 13 and 15 cargoes of crude oil to meet Nigeria’s domestic fuel demand but is currently receiving only about five cargoes well below the pre-agreed contract volumes.
Bird also raised concerns over crude quality. He explained that while Nigeria produces a wide range of crude grades, the refinery is not consistently allocated its preferred blends, despite being specifically configured to process certain crude slates for optimal efficiency.
Bird added that despite prioritising Nigerian grades, the company is forced to turn to the international market to source the same crude types that were not allocated locally often at higher costs and priced in U.S. dollars.
According to him, the refinery frequently receives neither the required volumes nor the desired quality, urging authorities to ensure increased supply and a more transparent allocation process.
He further explained that while about 30 per cent of the refinery’s crude needs are met under the Crude-for-Naira programme, the shortfall compels the company to source additional Nigerian grades from the international market at a premium.
“And so we do purchase those, and right now there’s obviously a global thirst for crude, no matter where it comes from. This has meant a significant premium is being attached to Nigerian crude grades. Currently, we are paying over $18 per barrel premium for those same grades. Meanwhile, the 30–35 per cent we receive under the Crude-for-Naira arrangement comes with no discount or subsidy,” he said.
Bird clarified that the Crude-for-Naira deal is still based on international benchmark pricing, dismissing the notion that it offers preferential pricing.
“We have to pay international benchmark freight rates, and freight costs have risen significantly, alongside insurance and other charges. There is a misconception that the Crude-for-Naira programme is a discount or subsidy it is not,” he stated.
“It is an arm’s-length transaction. We purchase, transport, and insure the crude at international benchmark prices, and all these cost inputs have increased due to the current global crisis.”
He expressed concern that Nigerian crude grades denied to the refinery are reappearing in the international market, where the company is still willing to pay a premium to secure them.
“It is disappointing that these same grades come back to us on the open market. The margin between the initial purchase price and the premium now being paid represents value leaking from Nigeria to international traders. We believe this is unnecessary and would like clarity on the allocation methodology,” he said.
Despite these challenges, Bird emphasised the refinery’s operational flexibility, noting that its infrastructure allows it to source crude globally.
“All our crude and feedstock are seaborne, meaning we can import international crudes when necessary. That flexibility is a strength, allowing us to optimise margins and maintain supply to the market,” he added.
He disclosed that between 30 and 40 per cent of the refinery’s crude intake now comes from international sources, reflecting the plant’s versatility.
“This underscores the foresight of Alhaji Aliko Dangote in building a highly flexible refinery capable of processing a wide variety of crude grades. At a time like this, that flexibility ensures we are not dependent on a single supply source,” Bird said.
