Audio By Carbonatix
Nigerian National Petroleum Company (NNPC) is allocating seven May cargoes to Dangote oil refinery, up from five in previous months, after the spike in fuel prices caused by the Iran war, two trade sources and a refinery official told Reuters.
Fuel prices in Nigeria have reached record highs, and the country's Dangote refinery has previously said the company could source only about five crude cargoes a month locally, far short of the 13–15 it requires, forcing it to import the rest at prices dictated by the impact of war in the Middle East.
An increase in crude allocations to the 650,000-barrel-per-day refinery, Africa's largest, could also curb the volumes of Nigerian crude available for export at a time when the Iran war has drastically cut supply from the Middle East, forcing buyers to hunt far and wide for available cargoes.
"NNPC has allocated more cargoes to Dangote for May," a senior Dangote official said. "While this will not completely meet our demands, it can help. We are also in negotiation with NNPC for more volumes."
NNPC cargoes are cheaper for the refinery because of lower shipping costs. Dangote recently had to pay premiums as high as $18 a barrel over the Brent crude benchmark to secure cargoes from the international market, the official said. That would be about $137 a barrel based on Tuesday's Brent price.
NNPC did not respond immediately to a request for comment.
Dangote has raised gasoline supplies to Nigeria’s domestic market this month, meeting the needs of a little more than two-thirds of Nigeria's daily requirement of 60 million litres.
It has also had to increase petrol depot prices by about 13%.
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