NNPC and Dangote Refinery in Talks to Extend Naira-Based Crude Supply Deal

Nigeria’s NNPC and Dangote Refinery are negotiating an extension of their naira-based crude supply deal, a critical agreement designed to stabilize domestic oil supply. The initial six-month contract, signed in October 2024, aimed to provide local refiners with easier access to crude despite ongoing currency challenges.

Under this agreement, NNPC supplied 48 million barrels of crude to Dangote Refinery, but the full intended volume was not delivered. While the deal was originally intended to benefit seven local refineries, only Dangote Refinery received crude under the arrangement.

Dangote Refinery’s Strategic Moves in Securing Crude Supply

The $20 billion Dangote Refinery, located near Lagos, has begun producing jet fuel, petrol, and naphtha, marking a major milestone in Nigeria’s refining sector. However, to sustain its 650,000 barrels per day capacity, the refinery has had to source crude from various international suppliers, including the U.S., Brazil, Libya, and Angola.

Given the complexities of securing a consistent supply, Dangote Refinery is actively seeking additional funding to ensure it has adequate crude oil to maintain operations. Negotiations with NNPC are ongoing to establish a long-term agreement that guarantees a steady flow of Nigerian crude.

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NNPC Aims to Boost Production for the Naira-Based Crude Supply Deal

As part of its strategy to meet domestic demand and support the naira-based crude supply deal, NNPC is working to increase Nigeria’s crude oil production. According to NNPC’s Group Chief Executive, Mele Kyari, the country is set to ramp up production to 1.6 million barrels per day in the current quarter.

This increase will help support local refining operations, reducing Nigeria’s dependence on imported petroleum products. Extending the naira-based crude supply deal could play a crucial role in ensuring a stable oil market and boosting the efficiency of the Dangote Refinery.

By securing a long-term naira-based crude supply deal, NNPC and Dangote Refinery can significantly improve Nigeria’s refining capacity, enhance energy security, and reduce the country’s reliance on foreign crude. The outcome of these discussions could reshape Nigeria’s oil sector for years to come.