Crude Oil Supply in Naira to Begin October 1, Dangote Refinery to Benefit

The Nigerian National Petroleum Company Limited (NNPC) is set to begin supplying crude oil to the Dangote Petroleum Refinery in exchange for naira starting October 1, 2024. This move follows the approval of a naira-based transaction framework by the Federal Executive Council, aimed at boosting local currency circulation and stabilizing fuel prices.

Under the agreement, NNPC will supply approximately 385,000 barrels of crude per day to the Lekki-based refinery, with payments made entirely in naira. In return, the Dangote Refinery will provide refined petroleum products such as diesel and petrol, also in naira.

This initiative is part of the broader strategy to ease pressure on the naira and reduce costs linked to foreign exchange in oil transactions. The deal is expected to enhance the availability of refined petroleum products across Nigeria, as well as reduce unnecessary transaction expenses.

The Technical Sub-Committee on Domestic Sales of Crude Oil, headed by Zacch Adedeji, confirmed that preparations for the rollout are in full swing. According to Adedeji, the framework has been meticulously designed to ensure smooth implementation. Regulatory bodies such as the Central Bank of Nigeria and the Nigerian Upstream Petroleum Regulatory Commission are also involved.

While the Dangote Refinery is the primary beneficiary of this naira-for-crude deal, modular refineries have expressed concerns about being left out. Representatives from the Crude Oil Refinery-owners Association of Nigeria (CORAN) have called on the government to expand the program to other refineries to avoid discrimination, as many modular refineries are facing operational challenges due to limited crude supply.

Despite the upcoming launch, some uncertainty remains, especially regarding pricing. The Dangote Refinery has yet to announce the official price for its refined products, though it has dismissed reports of selling at N898 per liter as misleading. A formal announcement from the presidential committee is expected soon.

This new policy signals a significant shift in Nigeria’s approach to managing its crude oil resources, with the goal of boosting local production and reducing reliance on foreign currency transactions. Nig