The Dangote Petroleum Refinery will need approximately N1.7 trillion worth of crude oil monthly due to President Bola Tinubu's directive mandating the Nigerian National Petroleum Company Limited (NNPC) to sell crude to domestic refineries, including the Dangote plant, in naira. This move is intended to stabilize fuel pump prices and the dollar-naira exchange rate.
President Tinubu's order, announced by his Special Adviser on Information and Publicity, Bayo Onanuga, emphasizes the government's effort to bolster the domestic oil refining sector. The Federal Executive Council adopted this directive to help maintain the stability of refined fuel prices and control the exchange rate fluctuations.
The $20 billion Dangote Refinery, located in Lekki, Lagos, is set to refine 500,000 barrels per day (bpd) of crude oil by August 2024, increasing to 550,000 bpd by December 2024. Using the average crude oil price of $83 per barrel, the refinery will require around $41.5 million (N56.55 billion) worth of crude oil daily, translating to approximately N1.7 trillion monthly.
Industry stakeholders have expressed their views on the directive:
Chief Ukadike Chinedu, National Public Relations Officer of the Independent Petroleum Marketers Association of Nigeria, emphasized the need for NNPC to meet this demand despite current production challenges.
Eche Idoko, Publicity Secretary of the Crude Oil Refiners Association of Nigeria, highlighted the positive impact of selling crude in naira on the local economy, including strengthening the naira against the dollar and potentially lowering fuel prices.
Alhaji Aliko Dangote, President of Dangote Industries, stated that the refinery is expected to generate over $26 billion annually. The refinery's production will include gasoline, diesel, jet fuel, and other refined products, with significant implications for Nigeria's fuel self-sufficiency and export capabilities.
NNPC aims to increase Nigeria's crude oil production to two million barrels per day by the end of the year. The country's daily production has already risen from 1.27 million barrels in June to 1.6 million barrels in July 2024. NNPC's Group Managing Director, Mele Kyari, expressed optimism about achieving this target, emphasizing the company's commitment to meeting both domestic and export demands.
The directive to sell crude oil in naira is expected to have far-reaching effects on Nigeria's economy, potentially stabilizing fuel prices and strengthening the naira. The Dangote Refinery's ramp-up in production and NNPC's increased output goals are crucial steps towards achieving energy security and economic stability in the country.
