The Federal Government has initiated a transformative naira-for-crude agreement that will supply Dangote Refinery with up to 400,000 barrels of Nigerian crude oil daily.
This significant deal, which aims to enhance local oil processing capabilities, is set to take effect over the next two months, delivering a total of 24 million barrels between October and November 2024.
Sources from the Nigerian National Petroleum Company Limited (NNPC) confirmed that this new arrangement will begin this week, coinciding with plans for three additional refineries to commence production of Premium Motor Spirit (PMS).
According to industry analysts, this increase in crude supply could substantially disrupt the Atlantic oil market, resulting in a decrease in Nigeria’s overall crude exports.
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“Dangote’s reliance on local feedstock will claim 13 to 14 shipments from Nigeria’s typical monthly export program of about 50 cargoes,” stated Ronan Hodgson, a London-based analyst at FGE.
He noted that the West African crude market is expected to tighten significantly in the fourth quarter, potentially pushing Nigerian exports below one million barrels per day.
The Dangote Refinery, with a capacity of 650,000 barrels per day, is currently operating at 60-70 percent efficiency and is projected to reach full capacity in the coming months.
This shift is pivotal as it represents a strategic move away from costly oil imports, aligning with Nigeria’s long-held objective of self-sufficiency in fuel production.
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“With the refinery operating at higher rates, we could see a rapid decline in West Africa’s dependence on gasoline and diesel imports,” Hodgson added.
The anticipated increase in local processing capacity could herald a new era for Nigeria’s oil sector, fostering economic growth and stability.
The NNPC’s agreement with Dangote also positions the state-owned company as the sole distributor of the refinery’s gasoline production, a decision that could further consolidate Nigeria’s energy landscape.
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