The Dangote Petroleum Refinery has received its first four shipments of crude oil from the Nigerian National Petroleum Company Limited (NNPCL) under the naira-for-crude agreement, officials from both the refinery and the federal government confirmed on Tuesday.
These deliveries mark the beginning of a new arrangement where crude oil is sold to local refineries in exchange for naira. The four shipments were delivered within the past three weeks as part of the government’s initiative to support domestic refining operations by selling crude in local currency.
Sources familiar with the deal stated that more crude deliveries are expected in the coming weeks. The $20 billion Lekki-based refinery, which is set to refine Premium Motor Spirit (PMS), also known as petrol, for domestic distribution, is now ramping up its operations.
A member of the Technical Subcommittee on Domestic Sale of Crude Oil in Local Currency, who spoke anonymously, confirmed that “additional shipments of crude are scheduled to be delivered to the Dangote refinery soon.”
The Dangote refinery is currently the only operational petrol-producing facility in Nigeria, making it the pilot beneficiary of the six-month naira-for-crude deal, which could be extended after the initial period.
The refinery had faced initial setbacks due to difficulties in securing crude oil supplies, with allegations that some international oil companies (IOCs) were obstructing the process by offering crude oil through foreign intermediaries at inflated prices.
Despite the challenges, the Vice President of Oil & Gas at Dangote Industries, Devakumar Edwin, expressed optimism that the refinery’s crude supply would stabilize, particularly with the introduction of the Domestic Crude Supply Obligation guidelines under Nigeria’s Petroleum Industry Act. Edwin had previously called for more transparent and direct access to locally produced crude.
The Federal Executive Council had approved the naira-for-crude policy in July, following President Bola Tinubu’s proposal to sell crude oil to local refineries in the local currency. The initiative, which took effect on October 1, is aimed at boosting domestic refining capacity and reducing Nigeria’s reliance on fuel imports.
With the first crude deliveries completed, the Dangote refinery is expected to begin the sale of refined petroleum products, including petrol, diesel, and aviation fuel, in naira, which industry insiders believe could eventually lead to a drop in fuel prices.
Chinedu Ukadike, spokesperson for the Independent Petroleum Marketers Association of Nigeria, praised the move, stating that the crude supply to Dangote would alleviate fuel shortages and ensure a more stable supply of refined products across the country. He added that market dynamics of demand and supply would ultimately influence fuel prices.
