Fuel Crisis: Crude Oil Supply Challenges Ease As Dangote Refinery Receives Four Cargoes

The Dangote Petroleum Refinery has taken delivery of four crude oil cargoes from the Nigerian National Petroleum Company Limited (NNPCL) as part of the naira-for-crude agreement, according to officials from both the refinery and the Federal Government on Tuesday.

The deliveries occurred over the past three weeks, marking the commencement of the crude sale to local refineries using the local currency.

Officials familiar with the deal confirmed that more crude oil shipments are expected in the coming weeks.

A source close to the Technical Subcommittee on Domestic Sale of Crude Oil disclosed to The PUNCH that “more cargoes will be delivered to the Dangote refinery soon.”

The refinery, which cost $20 billion, is preparing to begin selling refined petroleum products, including Premium Motor Spirit (PMS), directly to local marketers.

According to refinery officials, the first phase of the naira-for-crude arrangement will last six months, though it may be extended depending on the government’s decision.

The official noted that it was too early to determine the price per barrel under this agreement.

The source said: “The naira-for-crude deal has started. The Dangote refinery has received four cargoes so far and we are still expecting more. The four cargoes have been delivered to the refinery within the past three weeks. We are still expecting more cargo in the coming week.

“Don’t forget that this first phase of the naira-crude sale is just for six months. The government may decide to renew it at the end of the first six months and they may decide not to. So, we don’t know what will happen yet after the first six months.”

This development comes after earlier challenges in securing crude oil supplies when the 650,000 barrels-per-day refinery first commenced operations.

Aliko Dangote, President of Dangote Group, had previously raised concerns over international oil companies (IOCs) withholding crude supply, allegedly prioritizing foreign buyers.

Despite interventions from regulatory bodies, Dangote Group continued to face issues with the IOCs, particularly around pricing and supply terms.

In response to the situation, President Bola Tinubu’s administration approved the sale of crude oil to local refineries in naira during a Federal Executive Council meeting, starting with the Dangote refinery.

The supply of crude under this arrangement is expected to ease petrol shortages and stabilize prices as the Dangote refinery ramps up production.

Independent marketers have welcomed the move, anticipating that local refining will reduce the country’s reliance on imported petrol.

However, the introduction of domestic refining has led to a noticeable drop in fuel imports.

Data from S&P Global Commodity Insights indicated a sharp decline in gasoline shipments to Nigeria in early October, signaling a shift in the country’s fuel supply dynamics.