The Dangote Petroleum Refinery has expressed concern over the Nigerian National Petroleum Company Limited’s (NNPC) failure to meet its crude oil delivery commitments under the government’s naira-for-crude initiative. The refinery, which is the largest in Africa, was promised a minimum supply of 385,000 barrels per day (bpd) under the scheme launched in October to address foreign exchange challenges. However, Dangote officials, including Vice President of Dangote Industries, Edwin Devakumar, have criticized NNPC for falling short of this target.
According to Devakumar, the volumes delivered by NNPC have been “peanuts,” far below the refinery’s needs, which require 650,000 bpd to operate efficiently. “NNPC agreed to supply a minimum of 385,000 bpd, but they are not even delivering that,” Devakumar stated, highlighting the refinery’s struggles to secure enough crude for its operations. While the government had initially hoped to ease foreign exchange constraints by allowing local refineries to purchase crude in naira, the program’s implementation appears to be faltering just two months after its launch.
To mitigate the crude supply gap, the Dangote Refinery has turned to international markets. The $20 billion refinery recently resumed importing crude from the United States, purchasing approximately two million barrels of WTI Midland crude from Chevron. The shipment, scheduled to arrive next month, marks the first US crude purchase for the refinery since August. Despite these efforts, the refinery is still waiting for additional cargoes under the naira-for-crude program, as reports indicate that only four cargoes have been delivered so far.
The situation is further complicated by the fact that Dangote Refinery remains the only recipient of crude under the naira-for-crude initiative, as other Nigerian refineries have not been able to access the program. Mathins Obaze, the acting Executive Director of the Crude Oil Refinery-Owners Association of Nigeria, confirmed that other refineries are still engaging with the government to resolve the issue.
The crude shortfall is a significant challenge for the Dangote Refinery, which aims to compete with European refiners when operating at full capacity. With an initial capacity of 425,000 bpd, Dangote is targeting an 85% operational capacity by the end of the year. However, the current supply shortfalls have forced the refinery to seek alternatives, including purchases from global markets. While the refinery is hopeful that the situation will improve, the ongoing supply issues are a blow to the government’s ambition of boosting local refining capacity and easing foreign exchange pressures.
In the meantime, NNPC has not provided an explanation for the supply shortfalls, and it remains unclear when the crude deliveries will meet the agreed targets. The company has also been actively seeking new markets for its crude, with recent efforts to secure customers for its new Utapate crude oil grade in London.
