November 7, 2024
In a bid to optimize petroleum distribution across Nigeria, Dangote Refinery and Pinnacle Oil & Gas Limited have formalized a long-term partnership. This agreement underscores both companies’ commitment to enhancing the efficiency and competitiveness of the Nigerian oil market, with Pinnacle Oil’s advanced distribution terminal at the Lekki Free Zone set to play a central role.
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A Strategic Alliance for Distribution Efficiency
According to Robert Dickerman, Managing Director of Pinnacle Oil, the company built a state-of-the-art distribution terminal in Lekki Free Zone with significant investment to facilitate efficient nationwide petroleum distribution. This facility, designed to handle large volumes and prevent bottlenecks, was developed in collaboration with Dangote Refinery under a 13-year agreement.
“Pipeline transfer is far less costly than distribution by ship or trucking across the country. When we proposed this project to Dangote, they wholeheartedly agreed and signed a 13-year interconnection agreement with us,” Dickerman said. This pipeline infrastructure offers a more cost-effective alternative, eliminating delays associated with ship-to-ship transfers and reducing expenses linked to smaller vessel charters often required by Nigeria’s ports.
Pinnacle Oil’s Advocacy for Market Competition
Despite the productive partnership, recent tensions arose when Dangote Refinery accused Pinnacle Oil of distributing substandard petroleum products, a claim that Pinnacle has denied. Advocating for market competition, Dickerman emphasized the importance of a free market where various sources of supply are encouraged. “It is Pinnacle’s firm position that a market-based solution that encourages all sources of supply—be they local refineries, imports, or otherwise—is essential for Nigeria’s energy security and fair pricing,” he stated.
By supporting a competitive market, Dickerman argues that Nigeria could benefit from cost-effective supply options, fostering energy security and consumer access to quality products at the lowest attainable prices. Pinnacle Oil’s stance reflects a broader call for deregulation within the industry, ensuring that consumers benefit from a wider range of suppliers adhering to strict quality standards.
Pinnacle Terminal: Transforming Nigeria’s Petroleum Distribution
Before the establishment of Pinnacle’s Lekki terminal, the country’s shallow port drafts necessitated transferring imported cargo onto smaller vessels, adding to logistical delays and increased costs. The Pinnacle terminal resolves this issue by enabling full cargoes to be offloaded within 40 hours, significantly reducing vessel turnaround time. This streamlined approach is expected to save millions of dollars annually, benefiting both the industry and consumers.
Since operations began in 2021, this terminal has proven invaluable for Nigeria, allowing the direct transfer of petroleum products without complex transfer procedures. Industry analysts note that this development is a positive step towards reducing supply chain disruptions and stabilizing market prices.
Looking Forward: A Call for Collaborative Industry Practices
Dickerman highlighted that the Dangote Refinery could further benefit from Pinnacle’s terminal to maintain market stability. Rather than centralizing distribution through a single facility, he suggested that utilizing established infrastructure across the industry would prevent supply shortages and avoid potential price fluctuations.
This collaborative approach, he added, aligns with Pinnacle Oil’s vision of a well-regulated yet competitive market that maximizes efficiency for suppliers and consumers alike. “There is no need or desire to recreate a network where every truck must load at a single point for the entire country. It’s about supporting the broader distribution network to ensure stable and competitive prices,” Dickerman concluded.
The Future of Nigeria’s Oil Distribution
The Dangote-Pinnacle alliance represents a strategic shift in Nigeria’s approach to petroleum distribution. By integrating pipelines, advanced terminals, and efficient logistics, both companies are setting a new benchmark for industry practices. Their collaboration not only serves the Nigerian economy but also inspires industry stakeholders to consider innovative solutions for market efficiency and energy security.
For more details on this development, read the full story here.
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