The Nigerian Federal Government is set to deliver up to 400,000 barrels of crude oil daily to the Dangote refinery as part of its naira-for-crude agreement, a development expected to begin within the next two months.
This initiative will provide a total of 24 million barrels between October and November 2024.
The move marks a significant shift in the local oil industry, enhancing the refinery’s processing capacity and potentially reshaping the region’s import and export markets.
The Nigerian National Petroleum Company Limited (NNPC) has confirmed that crude oil supplies in naira to the Dangote Petroleum Refinery will commence this week, coinciding with plans for three additional refineries to begin producing Premium Motor Spirit.
Analysts predict that this increased demand from Dangote will drastically reduce Nigeria’s crude oil exports, potentially bringing them below 1 million barrels per day. The refinery, with a capacity of 650,000 barrels per day—larger than any other in Africa or Europe—is expected to claim 13 to 14 shipments from Nigeria’s typical monthly program of about 50 cargoes.
Experts believe the West African crude market will become “substantially tighter” in the fourth quarter due to this arrangement. Although some shipments may face delays, the overall scheduled volume significantly exceeds the average of 255,000 barrels per day that Dangote imported in the first half of the year.
Currently operating at 60-70% capacity, the Dangote refinery is anticipated to reach full capacity within months.
As a result, Nigeria may finally achieve its long-term goal of reducing costly oil product imports. If the refinery’s ramp-up continues successfully, the West African market for gasoline and diesel imports could experience a swift contraction.
Traders also report that Dangote has been scaling back on U.S. crude purchases, having imported large volumes earlier this year but subsequently adjusting its buying strategy.
The partnership between NNPC and Dangote, which allows the state-owned firm to be the sole distributor of the refinery’s gasoline output, could further transform Nigeria’s energy landscape.
