Dangote Refinery

The Dangote Petroleum Refinery and several modular refineries in Nigeria may spend about $8.56 billion on crude oil imports over the next six months to reach full operational capacity, averaging $1.43 billion per month.

This comes amid uncertainties surrounding the naira-for-crude policy between the Nigerian National Petroleum Company Limited (NNPCL) and Dangote Refinery, as well as concerns over the Domestic Crude Supply Obligation of the Federal Government.

The Dangote Refinery, with a 650,000 barrels-per-day capacity, has been forced to import crude due to difficulties in securing local supply. Similarly, the Edo Refinery, which plans to expand its capacity to 30,000 barrels per day, is negotiating with U.S. crude suppliers. Other modular refineries, struggling with local crude shortages, have remained largely inactive.

A major setback came when the first phase of the naira-for-crude arrangement was allegedly canceled, leaving refiners stranded. The NNPCL has allocated large crude volumes to foreign creditors to service loans, making it difficult to sustain the local crude supply agreement.

Following this development, Dangote Refinery halted naira sales of petroleum products, citing a mismatch between its dollar-denominated crude purchases and its sales proceeds. In response, the refinery imported 654,766 metric tonnes of crude in three days.

The fallout has led to rising fuel prices, with private depots increasing loading costs. Retail stations in Abuja now sell petrol at N940 per litre, while NNPCL and MRS stations maintain N880 per litre, causing long queues.

The uncertainty surrounding local crude supply continues to fuel price hikes and operational difficulties, raising concerns about the government’s ability to stabilize the petroleum sector.