Nigerian oil company supplies crude to Dangote refinery amid supply shortage concerns

Nigeria – Boubacar Sani

The Nigerian National Petroleum Corporation Limited (NNPC) defended its implementation of the federal government's policy of selling crude oil in exchange for the local currency (Naira), asserting that it supplied 100% of all available crude oil shipments under this arrangement to Dangote Petroleum Refinery.

This clarification comes amid claims from the Dangote Group that the refinery is receiving only four million barrels of crude oil per month, a figure far below the 13 million barrels per month forecast under President Paula Tinbo's 2024 directive.

Crude oil vs. naira

In a statement on behalf of the company, NNPC spokesman Andy Odeh said that the National Oil Corporation had fulfilled all its obligations under the “crude oil for naira” initiative, stressing that there was no deliberate withholding of crude supplies.

He explained that actual crude oil deliveries depend on factors such as crude availability, allocation schedules, and refinery operational plans, adding that both sides continue to work together to resolve any outstanding issues.

However, a senior official at the Dangote Group revealed that limited crude oil allocations made it impossible for the refinery to continue selling fuel in naira, forcing the company to adopt dollar pricing for petroleum products and increase exports to secure hard currency.

Crude oil production improved

The official stated that despite improved crude oil production in Nigeria, the refinery still receives only about four million barrels per month, which is far less than its operational needs.

The source also revealed that the crude oil received under the “crude for naira” arrangement will be processed, and that the equivalent in refined products will be supplied to the Nigerian market in naira via NNPC.

New pricing mechanism denominated in dollars

Last week, Dangote refinery announced a new dollar-denominated pricing mechanism, setting the price of gasoline at $0.779 per liter, diesel at $1.087 per liter, and jet fuel at $0.942 per liter.

This development has raised concerns among petroleum product marketers who fear the policy will lead to higher fuel prices for consumers, despite assurances from Nigeria's petroleum regulator (NMDPRA) that the pricing structure is in accordance with the Petroleum Industry Act. Meanwhile, the petrol supply crisis in the Federal Capital Territory worsened on Monday, with several major petrol stations suspending sales and others raising prices to between 1,250 and 1,280 naira per liter.

Monitoring showed that some NNPC and MRS petrol stations on the airport road in Abuja were closed, while stations belonging to independent distributors were selling petrol at much higher prices, forcing drivers to face long queues and fuel shortages.