The Dangote Petroleum Refinery has expressed growing concerns over the Federal Government’s shortfall in fulfilling its crude oil supply commitments under the naira-for-crude initiative.
This initiative, designed to ease foreign exchange demand by allowing local refineries to purchase crude in naira, was launched with the expectation of bolstering domestic refinery output. However, the anticipated supply volume has not materialized, leaving the refinery operating below its potential.
Devakumar Edwin, Vice President of Dangote Industries Limited, disclosed that the Nigerian National Petroleum Company Limited (NNPCL) has failed to provide the agreed quantity of crude oil to the refinery, despite initial assurances. The NNPCL had pledged a daily supply of at least 385,000 barrels to the Dangote Refinery to support stable production levels, according to a Reuters report. This commitment, established when the program began in October, has not been consistently met, causing operational setbacks. Edwin stressed that the refinery requires a minimum of 650,000 barrels per day (bpd) to operate at full capacity, yet even the agreed baseline of 385,000 bpd has not been reliably supplied.
Under the naira-for-crude arrangement, launched in July, local refineries were meant to secure a dependable crude supply without drawing on foreign currency reserves. Yet, despite this framework, industry sources told The PUNCH that, to date, only four crude oil shipments have been delivered to the Dangote refinery, with future deliveries still unconfirmed. This inconsistency has prompted Dangote to consider alternative crude sources, potentially from international suppliers, to maintain production. Just recently, the refinery acquired two million barrels of US WTI Midland crude—the first such purchase since August—underscoring its reliance on foreign markets to supplement insufficient domestic supplies.
The state-of-the-art Dangote Refinery, valued at $20 billion and located in Lekki, has a refining capacity of 425,000 bpd. The facility aims to achieve 85% operational capacity by the end of the year, aspiring to compete with European refineries in terms of efficiency and output. However, Edwin described the current crude supply from NNPCL as “peanuts,” highlighting the gap between the refinery’s needs and the resources available under the program.
Mathins Obaze, Acting Executive Director of the Crude Oil Refinery-Owners Association of Nigeria, confirmed that the Dangote Refinery remains the only Nigerian facility benefiting from the naira-for-crude scheme among the country’s eight operational refineries. Obaze noted that most refineries have not yet been able to secure crude under this initiative and are engaged in ongoing discussions with the government to resolve the issue.
The specific causes behind the shortfall in crude delivery remain unclear, as neither NNPCL nor the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has provided an official explanation. Earlier, Dangote urged NUPRC to enforce policies requiring oil producers to prioritize local refineries for crude allocation. Meanwhile, NNPCL appears to be exploring international markets to expand its customer base. Recently, NNPCL presented its new Utapate crude oil grade to potential term customers in London, signaling a move toward global outreach even as local refinery supply remains a challenge
