The Nigerian National Petroleum Company (NNPC) Limited recently halted its Naira-for-Crude deal with local refineries, an avenue which allowed them to buy crude oil in the local currency.
As a result of this development, local refineries, including the Dangote refinery, are now expected to purchase crude oil in USD from the international market, potentially leading to financial constraints.
In response to this, the Dangote refinery has decided to source some of its crude oil from foreign markets to reduce costs. Since the beginning of the month, the refinery has purchased over three million barrels of crude oil from the United States.
Additionally, a recent report revealed that the refinery has now resorted to Equatorial Guinea for fresh crude supplies, buying its first cargo of medium sweet Ceiba crude.
Despite reports that the NNPC supplied large shipments of additional crude to Dangote, the refinery secured a 950,000-barrel cargo from Equatorial Guinea. This aligns with the refinery’s recent price drop from N825 per liter to N815 per liter.
The Dangote Refinery has also recently purchased crude oil from other African markets, including Algeria. In February, the refinery acquired its first consignment of light sweet Saharan Blend crude from Glencore, Algeria.
The NNPC’s decision to discontinue the Naira-for-oil intiative was reportedly as a result of the company forward-selling all its crude, despite production levels being higher than when the arrangement started. Citing that the company sold future oil production in advance for obvious reasons.
Olufemi Soneye, the NNPC spokesperson revealed that the Dangote refinery has had access to 48 million barrels of crude oil since the naira-for-crude agreement began in October 2024.
He said “Under this arrangement, NNPC has made over 48 million barrels of crude oil available to Dangote Refinery since October 2024. In aggregate, NNPC has made over 84 million barrels of crude oil available to the Refinery since its commencement of operations in 2023,”
However, negotiations between the NNPC and Dangote for a new Naira-for-Crude deal are in progress
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