Dangote Petroleum Refinery has expressed growing concerns over the Nigerian government’s failure to meet its commitments under the naira-for-crude arrangement. This initiative, which was designed to reduce the demand for foreign exchange by enabling local purchases of crude oil in naira, has not been fully implemented, leaving Dangote’s refinery struggling to meet its production goals. Devakumar Edwin, Vice President of Dangote Industries Limited, disclosed that the refinery has received only a small fraction of the promised crude oil supply from the Nigerian National Petroleum Company Limited (NNPCL), jeopardizing its output targets.
Speaking to Reuters, Edwin outlined the refinery’s needs, stating, “We need 650,000 barrels per day (bpd). NNPCL agreed to supply at least 385,000 bpd, but they are not even delivering that.” He emphasized that the shortfall in crude oil deliveries has hindered the refinery’s operations, which was designed to have a capacity of 425,000 bpd. Despite hopes to reach 85% capacity by the end of the year, the refinery is currently operating below its potential due to the inadequate supply.
The naira-for-crude program, launched in July, was intended to alleviate foreign exchange pressures in Nigeria, but Edwin described the current supply situation as disappointing. “The deliveries we’ve received so far are peanuts compared to what we need,” he said. To date, the refinery has received just four shipments under the scheme. Faced with ongoing supply issues, Dangote has begun to source crude oil from other markets. Most recently, the refinery received two million barrels of U.S. WTI Midland crude, its first foreign purchase since August due to domestic supply gaps.
Mathins Obaze, acting Executive Director of the Crude Oil Refinery-Owners Association of Nigeria, added context to the issue, noting that Dangote is currently the only refinery benefiting from the naira-for-crude arrangement, out of eight operational refineries in the country. Obaze revealed that other Nigerian refineries are actively negotiating with the government to access crude oil under the initiative, but have yet to secure any supply.
Despite Dangote’s calls for prioritizing domestic refining, the NNPCL has continued to market Nigerian crude oil on the international market. Recently, the corporation promoted its Utapate grade to global clients in London, highlighting the challenges faced by local refineries in securing adequate domestic supplies. This global marketing strategy contrasts sharply with the needs of local refineries, which are struggling to source enough crude to operate efficiently.
Neither the NNPCL nor the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has publicly commented on the reasons behind the supply shortages. This lack of transparency has left refinery operators in the dark about when, or if, the supply situation will improve. The uncertainty surrounding crude oil deliveries has intensified the pressure on Dangote’s refinery, which was expected to play a significant role in Nigeria’s oil refining capacity.
