The Dangote Petroleum Refinery has raised concerns about the Nigerian government’s failure to deliver on its crude oil supply commitments under the naira-for-crude arrangement, a program aimed at reducing foreign exchange demand by allowing local purchases of crude oil in naira. Devakumar Edwin, Vice President of Dangote Industries Limited, disclosed that the refinery has received only a fraction of the promised supply from the Nigerian National Petroleum Company Limited (NNPCL), jeopardizing the refinery's output goals.
Edwin, speaking to Reuters, highlighted the disparity, 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.” The shortfall in crude delivery has forced the $20 billion Lekki-based refinery, which aspires to compete with European refineries, to operate below its capacity of 425,000 bpd, with hopes to reach 85% capacity by year’s end.
The naira-for-crude initiative was launched in July to alleviate foreign exchange pressures, yet Edwin reported that NNPCL’s deliveries remain “peanuts” compared to the refinery’s demand. While four shipments have been supplied, further deliveries are awaited, and Dangote has been compelled to explore alternative sources. On Wednesday, the refinery received two million barrels of U.S. WTI Midland crude, marking its first foreign acquisition since August due to domestic supply gaps.
Mathins Obaze, acting Executive Director of the Crude Oil Refinery-Owners Association of Nigeria, noted that Dangote is the sole refinery benefiting from the naira-for-crude scheme among eight operational refineries. Obaze added that other refiners are currently negotiating with the government to access crude through the initiative.
Despite the refinery's call for domestic prioritization, the NNPCL is marketing Nigerian crude globally, recently promoting its Utapate grade to international clients in London. Neither the NNPCL nor the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has commented on the reasons for the supply constraints.
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