The Dangote Refinery, Africa’s largest oil refinery, is reportedly considering increasing its crude oil imports from Angola and Algeria as discussions with the Nigerian government continue regarding the naira-for-crude arrangement. The $19 billion refinery has been instrumental in Nigeria’s efforts to achieve petroleum self-sufficiency, reducing the country’s dependence on imported fuel since it commenced operations. As the refinery approaches full operational capacity, it is exploring options to secure more crude oil to meet its production targets.
Recent data from Bloomberg indicates that the refinery has already received over three million barrels of American crude this month. It has also diversified its crude sources by importing Angola’s Pazflor grade and Algeria’s Saharan Blend from Glencore Plc in recent weeks. Analysts at Energy Aspects Ltd. reported that crude deliveries to the Dangote Refinery have averaged 450,000 barrels per day over the past two weeks, an increase from an estimated 380,000 barrels per day earlier in the year. Randy Hurburun, a senior refinery analyst at the consultancy, noted that satellite monitoring shows a recent drawdown in crude stocks at the refinery, indicating heightened operational activity.
The Nigerian National Petroleum Company (NNPC) Limited recently addressed reports regarding the naira-for-crude oil agreement with the Dangote Refinery. Contrary to claims that the national oil company had suspended the policy until 2030 after forward-selling all its crude oil, NNPC clarified that the contract was initially structured as a six-month agreement set to expire in March 2025. The company stated that discussions are ongoing to establish a new agreement and revealed that it has supplied over 48 million barrels of crude oil to the refinery since October 2024, totaling more than 84 million barrels since the refinery began operations in 2023.
Despite this, concerns persist regarding the supply of crude oil to the refinery. Edwin Devakumar, vice-president of Dangote Industries Limited, emphasized that the refinery requires 650,000 barrels per day to operate optimally. He noted that while NNPC had committed to a minimum supply of 385,000 barrels per day, it has struggled to meet even that threshold.
Minister of Petroleum Resources (Oil), Heineken Lokpobiri, recently confirmed that the federal government has not terminated the naira-for-crude oil arrangement. He explained that the deal, which involves NNPC supplying crude oil to domestic refineries with payments made in naira, was a pilot scheme, and discussions for its continuation are ongoing.
