The Federal Government is set to supply up to 400,000 barrels of Nigerian crude oil daily to the Dangote Refinery under a new naira-for-crude arrangement. This agreement, expected to roll out between October and November 2024, will deliver a total of 24 million barrels of Nigerian crude, significantly boosting the refinery's processing capacity.
The deal follows the commencement of the Federal Government’s naira-for-crude policy, which allows for the exchange of local currency for crude oil supply. This development is anticipated to tighten the West African crude oil market, reducing Nigeria's export volumes as Dangote takes on a larger share of local feedstock. The refinery's operations could also disrupt the Atlantic oil market, with analysts predicting a decrease in Nigeria’s crude exports to below 1 million barrels per day.
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Dangote Refinery, Africa’s largest with a capacity of 650,000 barrels per day, has been steadily ramping up its operations, currently processing between 60-70% of its capacity. With the NNPC serving as the sole distributor of the refinery’s gasoline, the government aims to reduce Nigeria's dependency on costly oil imports in the coming months as the refinery edges towards full operation.
