The Dangote Refinery, Africa’s largest oil refinery, is reportedly considering increasing its crude oil imports from Angola and Algeria as discussions continue over the naira-for-crude arrangement with the Nigerian government.
This development comes as the Nigerian government engages in discussions to finalise a naira-for-crude deal, aimed at strengthening the local currency and reducing dependency on foreign exchange for oil transactions.
The $19 billion Dangote Refinery, Africa’s largest oil refinery, has been a cornerstone of Nigeria’s efforts to achieve self-sufficiency in petroleum products.
Since its operations, the refinery has significantly reduced the nation’s reliance on imported fuel.
However, with the facility close to operating at full capacity, the refinery is now exploring options to import crude oil to meet its production targets.
Bloomberg data show Dangote refinery has taken delivery of more than three million barrels of American crude since the start of the month.
The refinery has also made purchases closer home, importing a shipment of Angola’s Pazflor grade and a cargo of Algeria’s Saharan Blend from Glencore Plc in recent weeks.
According to analysts at Energy Aspects Ltd., crude deliveries to the Dangote refinery have averaged 450,000 barrels per day in the past two weeks, up from an estimated 380,000 barrels per day in January and February.
Read also: NNPC suspends naira-for-crude deal for Dangote, others
“Our satellite monitoring shows a recent draw in crude stocks at the refinery, indicating runs are likely on the rise,” said Randy Hurburun, a senior refinery analyst at the consultancy.
On Monday, BusinessDay reported that the Nigerian National Petroleum Company (NNPC) Limited has suspended the naira-for-crude deal until 2030, as it has forward-sold all its crude oil.
Less than 24 hours later, the NNPC said negotiations were ongoing for a new naira-for-crude deal with Dangote Petroleum Refinery.
Analysts warn that the abrupt end of the naira-based crude supply arrangement could create instability in Nigeria’s foreign exchange market, potentially reversing recent gains in naira valuation. The move also raises questions about the government’s broader energy policy, given that domestic refining was seen as a key strategy for reducing fuel import dependency.
In October 2024, the Federal Executive Council (FEC), had approved a plan to allocate 450,000 barrels of crude per day for local refining, to be sold in naira. Dangote’s refinery was selected as the pilot beneficiary of the initiative, with an allocation of 385,000 barrels per day from NNPCL. However, the programme soon ran into challenges, as the NNPCL, it was gathered, struggled to meet its supply obligations.
By November 2024, the Dangote refinery had raised concerns that it was not receiving sufficient crude under the naira-for-crude framework, signaling early cracks in the arrangement. With NNPCL now fully withdrawing from the deal, local refiners may be left with no choice but to seek alternative crude supply sources at significantly higher costs.
This latest development underscores ongoing challenges in Nigeria’s petroleum sector, leaving key questions unanswered about the future of domestic refining and the affordability of fuel for Nigerians.
“We need 650,000 barrels per day. The NNPCL agreed to give a minimum of 385,000 bpd but they are not even delivering that,” Edwin Devakumar, vice-president of Dangote Industries Limited, DIL, had said.
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