Seven major oil marketers in Nigeria have registered with the Dangote Petroleum Refinery for the lifting and distribution of refined petroleum products produced by the $20bn plant.
Gatekeepers News reports that dealers under the aegis of the Major Oil Marketers Association of Nigeria confirmed on Sunday that with the registration, they would commence the distribution of fuel produced from the facility once the commercial terms are sorted.
This came as the Independent Petroleum Marketers Association of Nigeria also revealed that they would meet with the management of the Dangote refinery this week to discuss terms of product loading.
Similarly, the Petroleum Products Retail Outlets Owners Association of Nigeria stated that PETROAN had been engaging the management of the multi-billion dollar refinery for the supply of products from the facility.
As IPMAN and PETROAN engage the refinery, major marketers who are members of MOMAN have already registered with the plant and are set to start buying products.
The seven major marketers include 11 Plc, Conoil Plc, Ardova Plc, MRS Oil Nigeria Plc, OVH Energy Marketing Limited, Total Nigeria Plc and NNPC Retail.
On Friday, the Dangote Petroleum Refinery announced the commencement of production of Automotive Gas Oil, also known as diesel, and JetA1 or aviation fuel.
The President of the Dangote Group, Aliko Dangote, had in a statement issued by the firm, thanked President Bola Tinubu for his support, encouragement, and thoughtful advice towards the actualisation of the project.
He also thanked the Nigerian National Petroleum Company Limited, Nigerian Upstream Petroleum Regulatory Commission, Nigerian Midstream and Downstream Petroleum Regulatory Authority, and Nigerians for their support and belief in the historic project.
“We have started the production of diesel and aviation fuel, and the products will be in the market within this month once we receive regulatory approvals. This is a big day for Nigeria. We are delighted to have reached this significant milestone.
“This is an important achievement for our country as it demonstrates our ability to develop and deliver large capital projects. This is a game changer for our country, and I am very fulfilled with the actualisation of this project,” Dangote stated.
The refinery, located in Lagos, has so far received six million barrels of crude oil at its two SPMs located 25km from the shore. The first crude delivery was done on December 12, 2023, and the 6th cargo was delivered on January 8, 2024.
The refinery can load 2,900 trucks a day at its truck-loading gantries. The products from the refinery will conform to Euro V specifications, according to the firm.
“The refinery design complies with the World Bank, US EPA, European emission norms, and Department of Petroleum Resources emission/effluent norms, employing state-of-the-art technology,” the company stated.
The Dangote Petroleum Refinery and Petrochemical Project, a subsidiary of Dangote Industries Limited, is a 650,000 barrels per day crude oil refinery, located in Dangote Industries Free Zone, Ibeju-Lekki, Lagos, Nigeria.
The Dangote Petroleum Refinery is an industrial plant that transforms crude oil into various usable petroleum products such as diesel, gasoline, jet fuel, and kerosene.
Dangote Petroleum Refinery with a capacity to refine 650,000 barrels of crude oil per day covers an area of approximately 2,635 hectares in the Lekki Free Trade Zone in Lagos.
According to the Executive Secretary/Chief Executive Officer, MOMAN, Clement Isong, “I confirm that we (major marketers) have met with him (Dangote).
According to Isong, all MOMAN members have registered with Dangote Petroleum Refinery to become marketers of its products. He told The PUNCH.
“We have all registered with Dangote so that we can buy and sell. All my members are registered with Dangote. Whenever the product is ready and starts coming out, you will see it in our filling stations,” he said.
I confirm that my members have registered with them. We were waiting for the production to start and now it has started and they will start discussing the commercial terms. So yes, major marketers and other players will buy for the market. The important thing was the registration.
“So now the commercial terms will be agreed with each marketer and then they will buy from them. There are several ways you can buy from them. They have loading ranks, over 90, so you can take your truck to go and pick. You can also use vessels to pick. Those are the two ways you pick products.”
Asked to state how soon marketers would start picking products from the plant, Isong said, “I don’t know, but I know we started registration last year. So as soon as they say they are ready we will pick the products. Also as soon as the commercial terms are set, my members will pick.”
Former President Muhammadu Buhari inaugurated the Dangote refinery in May 2023. The facility missed its crude oil refining target a number of times due to the non-supply of crude to the plant by oil producers.
It, however, started receiving crude oil batches of one million barrels each in December 2023 and got the 6th batch of one million barrels of crude this month. Officials at the plant had explained that the refinery required six million barrels of crude to commence production.
Meanwhile, the MOMAN CEO expressed excitement about the coming onstream of the refinery but stated that he could not tell what the pricing policy of the refinery would be.
“It should be the market price because you need to recover your cost, and capital, and repay your loans. I don’t know what the market price will be, but I know that with my international experience in the economics of petroleum, nobody does this business to make a loss,” he stated.
The prices of diesel and aviation fuel are fully deregulated commodities, unlike that of Premium Motor Spirit, popularly called petrol, which has been a subject of debate on whether it is being subsidised or not.
The major marketers CEO further explained that the cost of crude oil would play a major role in determining the cost of fuel from Dangote refinery.
He said, “We expect the price of products to be what is called market price. Remember he has built the refinery at $19bn. He has to refund his loan. He has to pay his contractors. He has to pay the owners of capital.
“I believe he will sell the product at a price that will enable him to recover his costs, both capital and operational costs, and then make a profit. I don’t expect the price to be much different from the market price today.
“You know that crude oil is also priced in dollars, so what’s the difference? The price of crude oil is the same internationally, even if you buy locally. Why will you buy below the cost, unless you want to go back to subsidising. Crude oil is very expensive to produce. A lot of that oil is offshore.
“I’ve heard some people say there will be savings in freight, that might be true. But that is a very small part of the cost. The major part of the cost is the raw material, which is the crude oil; even the refining cost is quite small. I don’t expect a significant drop in price, definitely not N400, that’s very unlikely, in my opinion.”
