Oil Price To Drop Soon As Oil Marketers Partner Dangote Refinery for Product Distribution

by J.J Olawuyi

Leading oil marketers in Nigeria, comprising major players like 11 Plc, Conoil Plc, and Total Nigeria Plc, have officially enrolled with the Dangote Petroleum Refinery to facilitate the lifting and distribution of refined petroleum products from the colossal $20 billion plant.

Members of the Major Oil Marketers Association of Nigeria confirmed their registration on Sunday, signaling their readiness to kickstart the distribution of fuel produced by the refinery as soon as the commercial terms are finalized. Simultaneously, the Independent Petroleum Marketers Association of Nigeria announced plans to meet with the Dangote refinery management this week to discuss terms related to product loading.

The Petroleum Products Retail Outlets Owners Association of Nigeria also disclosed ongoing engagements with PETROAN, focusing on securing the supply of products from the multi-billion-dollar refinery.

While the Independent Petroleum Marketers Association of Nigeria and PETROAN engage with the refinery, major marketers affiliated with MOMAN have already completed their registration with the plant, gearing up to commence product procurement. The seven major marketers in question 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 officially announced the initiation of production for Automotive Gas Oil (diesel) and JetA1 (aviation fuel). Aliko Dangote, President of the Dangote Group, expressed gratitude for the support received from key figures, including President Bola Tinubu, and conveyed excitement about reaching this significant milestone for Nigeria.

The refinery, situated in Lagos, has received six million barrels of crude oil to date, with the capacity to load 2,900 trucks daily at its truck-loading gantries. Products from the refinery adhere to Euro V specifications, ensuring high-quality standards.

The Dangote Petroleum Refinery, a subsidiary of Dangote Industries Limited, is a substantial 650,000 barrels per day crude oil refinery located in the Dangote Industries Free Zone, Ibeju-Lekki, Lagos, Nigeria. The refinery covers an expansive area of approximately 2,635 hectares in the Lekki Free Trade Zone.

**MOMAN’s Preparedness**

Clement Isong, Executive Secretary/Chief Executive Officer of MOMAN, affirmed that major oil marketers have engaged with Dangote and registered with the refinery. Isong clarified that once the production is underway, MOMAN members will promptly make the product available in their stations. He emphasized the importance of the registration process and highlighted that commercial terms would be negotiated with each marketer for product procurement.

Isong expressed excitement about the refinery’s operational commencement but acknowledged uncertainty regarding its pricing policy. He stressed the expectation of market-driven prices considering the substantial investment in the refinery, emphasizing that nobody enters the petroleum business to incur losses.

While diesel and aviation fuel prices are fully deregulated, Isong pointed out that the cost of crude oil would significantly influence the final fuel prices from the Dangote refinery. He anticipated that the prices would align with the market rates.

**Prospects for Reduced Fuel Prices and Positive Industry Impact**

Industry stakeholders, including the President of IPMAN, Abubakar Maigandi, foresee positive changes with the coming onstream of the Dangote refinery. Maigandi revealed IPMAN’s upcoming meeting with the refinery’s management to discuss loading modalities, adding that the exact pricing details would be determined during the loading process.

Billy Gillis-Harry, President of PETROAN, anticipated a marginal drop in the cost of refined products due to reduced logistics costs associated with domestic crude oil consumption. He acknowledged challenges in providing an exact figure but emphasized the potential benefits for Nigerians.

The impact of the Dangote refinery’s production was hailed by various stakeholders, including former President of the Association of National Accountants of Nigeria, Dr. Sam Nzekwe, who expressed optimism about reduced fuel costs and encouraged further investments in local refining capacity.

As the refinery marks a pivotal development in Nigeria’s refining landscape, stakeholders look forward to increased competition, reduced margins, and enhanced accessibility to refined products, contributing to overall positive economic and employment outcomes.

Efforts to reach the Dangote Group for comments have been unsuccessful. The Group Director of Corporate Communication, Anthony Chiejina, had earlier committed to responding but did not provide updates as of Sunday.

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