Written by SpringnewsNG Media Limited, March 13, 2925.

The Dangote Refinery, Africa’s largest oil refinery, is reportedly seeking to increase its crude oil imports from Angola and Algeria as negotiations over the naira-for-crude arrangement with the Nigerian government remain unresolved.

This move follows the Nigerian government’s efforts to finalize a naira-for-crude deal aimed at bolstering the local currency and reducing dependence on foreign exchange for oil transactions. The $19 billion Dangote Refinery has played a pivotal role in Nigeria’s quest for self-sufficiency in petroleum products and has significantly reduced the nation’s reliance on imported fuel.

However, with the refinery approaching full operational capacity, it is now exploring alternative crude supply options to meet production targets. Bloomberg data indicates that Dangote Refinery has received over three million barrels of American crude since the start of the month. Additionally, the refinery recently imported a shipment of Angola’s Pazflor grade and Algeria’s Saharan Blend from Glencore Plc.

According to Energy Aspects Ltd., crude deliveries to the Dangote refinery have averaged 450,000 barrels per day over the past two weeks, an increase from the estimated 380,000 barrels per day recorded in January and February.

NNPC Suspends Naira-for-Crude Deal

In a related development, the Nigerian National Petroleum Company (NNPC) Limited announced the suspension of the naira-for-crude deal until 2030, having forward-sold all its crude oil. However, NNPC clarified that negotiations for a new naira-for-crude deal with the Dangote Petroleum Refinery are ongoing.

Industry analysts caution that the abrupt suspension of the naira-based crude supply arrangement could destabilize Nigeria’s foreign exchange market and potentially reverse recent gains in naira valuation. The situation also raises concerns about the government’s broader energy policy, which aimed to reduce fuel import dependency through domestic refining.

In October 2024, the Federal Executive Council (FEC) approved the allocation of 450,000 barrels of crude per day for local refining, to be sold in naira. Dangote Refinery was designated as the pilot beneficiary, with an allocation of 385,000 barrels per day from NNPC. However, the programme encountered challenges as NNPC struggled to meet its supply obligations.

By November 2024, Dangote Refinery had raised concerns about insufficient crude supply under the naira-for-crude framework, signaling early cracks in the arrangement. With NNPC’s full withdrawal from the deal, local refiners may be forced to seek alternative crude supplies at significantly higher costs.

“We need 650,000 barrels per day. The NNPC agreed to give a minimum of 385,000 bpd but they are not even delivering that,” said Edwin Devakumar, vice-president of Dangote Industries Limited (DIL).

This latest development highlights the persistent challenges in Nigeria’s petroleum sector and leaves key questions unanswered regarding the future of domestic refining and fuel affordability for Nigerians.