A senior Nigerian lawmaker has alleged that the country’s crude oil is being sold to domestic refineries, including the Dangote Refinery, through intermediaries in London and Dubai who add significant mark-ups to the cost.
Ikenga Ugochinyere, Chairman of the House of Representatives Committee on Petroleum Resources (Downstream), claimed during a press briefing that these middlemen inflate the price by $18 for every $100 barrel. He warned this practice could lead to a crude supply shortage for the 650,000-barrel-per-day Dangote Refinery, potentially causing fuel and diesel scarcity in Nigeria.
“For every barrel priced at $100, refineries pay $118, with the additional $18 going to intermediaries,” Ugochinyere stated. He criticized the arrangement, noting the intermediaries “add no value but collect huge fees.”
The allegations emerge against a backdrop of rising global oil prices. Brent crude has climbed to approximately $110 per barrel following military escalations in the Middle East, including Iranian attacks on oil facilities in Kuwait and Qatar, and the ongoing blockade of the Strait of Hormuz. These tensions have exacerbated cost pressures on oil-importing nations.
In Nigeria, the surge has contributed to a more than 40 percent increase in domestic fuel prices. Data from Friday shows Dangote Refinery’s petrol selling at N1,175 per liter, while retail prices in Abuja range from N1,261 to N1,320 per liter.
Ugochinyere’s comments highlight concerns about the structure of Nigeria’s crude oil supply chain. If the alleged intermediation costs are accurate, they could undermine the economic viability of the nation’s refining sector, particularly the $20 billion Dangote Refinery, which was expected to reduce reliance on imported fuels. The lawmaker’s warning underscores the potential for continued fuel scarcity and higher prices for consumers unless the crude supply mechanism is restructured to eliminate the purported additional costs.
The situation places a spotlight on the Nigerian National Petroleum Company (NNPC) and its crude oil allocation processes, as stakeholders await a formal response to the allegations.
