Sources close to Dangote Petroleum Refinery explained that the
refinery's plans to import crude oil was because of insufficient supply
from the Nigerian National Petroleum Company (NNPC) Limited. Despite the
naira-for-crude deal initiated by President Bola Tinubu, which allows
refineries to buy crude oil in local currency, the NNPC struggles to
meet the refinery’s massive daily crude requirement. Currently producing
500,000 barrels per day (bpd), the refinery aims to scale up production
to its full capacity of 650,000bpd by mid-2025. However, the available
supply from the NNPC falls short of this demand, necessitating the
exploration of external crude oil sources to bridge the gap.
The refinery’s officials assert that the decision to import crude does not reflect a failure on the part of the NNPC but rather highlights the sheer scale of their operations. The refinery’s capacity significantly exceeds that of most refineries globally, making it one of the largest in the world. While the NNPC provides 350,000bpd of the 450,000bpd allocated for Nigeria’s local consumption, this allocation remains inadequate to fully supply the Dangote refinery’s needs. Therefore, importing crude oil from other markets becomes a practical necessity to maintain uninterrupted production and meet the growing demand for refined petroleum products.
A consultant to the Dangote Refinery emphasized the magnitude of its operations, describing the refinery business as a venture for major players in the global oil and gas industry. According to him, the refinery’s capacity is unparalleled in many regions, including Europe, and its output has already begun to affect international petroleum markets. The refinery produces Euro 5 standard petrol, known for its high quality and superior combustion efficiency, which contributes to better fuel economy and reduced emissions. Nigerian consumers are experiencing these benefits in the burn rate of Dangote petrol, further driving demand.
The naira-for-crude initiative, which started in mid-2024, allows Nigerian refineries to purchase crude oil using the local currency rather than dollars. This policy aims to support domestic refining capacity and reduce foreign exchange pressure. Initially, the Dangote Refinery served as a pilot project for the program, receiving priority access to locally sourced crude oil. However, as more refineries, including those in Port Harcourt and Warri, resume operations, competition for the limited crude allocation intensifies. The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) estimates that eight operational refineries, including Dangote, will require a combined total of 770,500bpd in 2025. This figure far exceeds the 450,000bpd designated for domestic refining.
According to NUPRC projections, the Dangote Refinery alone will need 550,000bpd of Nigerian crude oil blends daily to sustain optimal production. Between January and June 2025, this requirement translates to 99.55 million barrels. The shortfall in domestic supply highlights the urgency of supplementing local crude with imports to maintain the refinery’s output. Smaller refineries such as Opac, Waltersmith, Duport, and Edo have comparatively modest requirements ranging from 1,000 to 7,000bpd, but even these volumes contribute to the overall pressure on Nigeria’s crude allocation system.
To address its supply challenges, the Dangote Refinery is expanding its crude storage capacity by constructing eight additional tanks. This expansion will increase its crude storage volume by 41.67%, raising total capacity to 3.4 billion litres. The refinery’s management acknowledges that higher crude inventories are necessary when relying on imports, as external supplies may have longer lead times and greater logistical complexities. Devakumar Edwin, Vice President for Oil and Gas at Dangote Industries, confirmed that four of the new storage tanks are nearing completion. He reiterated that the decision to import crude stems from persistently low supply levels from the NNPC.
Although the naira-for-crude program promises significant long-term benefits, its initial phase faces implementation hurdles. While the NNPC is expected to deliver 385,000bpd to the Dangote Refinery under this arrangement, it remains unclear whether these volumes have been consistently supplied. The Federal Government plans to review the program in April 2025 to assess its impact and make necessary adjustments. In the meantime, industry experts caution that the refinery’s dependence on imports could continue until Nigeria’s overall crude production increases and distribution mechanisms are refined to meet domestic refining needs efficiently.
The Dangote Refinery’s reliance on imported crude oil underscores broader structural issues within Nigeria’s oil and gas sector. Despite being a major crude oil producer, Nigeria’s refining capacity has historically lagged behind domestic consumption needs, leading to a heavy dependence on imported refined products. The successful operation of large-scale refineries like Dangote’s offers a pathway to reversing this trend, but it also highlights the complexities of managing supply chains and optimizing resource allocation in a dynamic global market. As the refinery ramps up production and more domestic refineries come online, Nigeria’s refining landscape will require careful coordination between regulators, producers, and refinery operators to ensure sustainable growth and energy security.
The refinery’s officials assert that the decision to import crude does not reflect a failure on the part of the NNPC but rather highlights the sheer scale of their operations. The refinery’s capacity significantly exceeds that of most refineries globally, making it one of the largest in the world. While the NNPC provides 350,000bpd of the 450,000bpd allocated for Nigeria’s local consumption, this allocation remains inadequate to fully supply the Dangote refinery’s needs. Therefore, importing crude oil from other markets becomes a practical necessity to maintain uninterrupted production and meet the growing demand for refined petroleum products.
A consultant to the Dangote Refinery emphasized the magnitude of its operations, describing the refinery business as a venture for major players in the global oil and gas industry. According to him, the refinery’s capacity is unparalleled in many regions, including Europe, and its output has already begun to affect international petroleum markets. The refinery produces Euro 5 standard petrol, known for its high quality and superior combustion efficiency, which contributes to better fuel economy and reduced emissions. Nigerian consumers are experiencing these benefits in the burn rate of Dangote petrol, further driving demand.
The naira-for-crude initiative, which started in mid-2024, allows Nigerian refineries to purchase crude oil using the local currency rather than dollars. This policy aims to support domestic refining capacity and reduce foreign exchange pressure. Initially, the Dangote Refinery served as a pilot project for the program, receiving priority access to locally sourced crude oil. However, as more refineries, including those in Port Harcourt and Warri, resume operations, competition for the limited crude allocation intensifies. The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) estimates that eight operational refineries, including Dangote, will require a combined total of 770,500bpd in 2025. This figure far exceeds the 450,000bpd designated for domestic refining.
According to NUPRC projections, the Dangote Refinery alone will need 550,000bpd of Nigerian crude oil blends daily to sustain optimal production. Between January and June 2025, this requirement translates to 99.55 million barrels. The shortfall in domestic supply highlights the urgency of supplementing local crude with imports to maintain the refinery’s output. Smaller refineries such as Opac, Waltersmith, Duport, and Edo have comparatively modest requirements ranging from 1,000 to 7,000bpd, but even these volumes contribute to the overall pressure on Nigeria’s crude allocation system.
To address its supply challenges, the Dangote Refinery is expanding its crude storage capacity by constructing eight additional tanks. This expansion will increase its crude storage volume by 41.67%, raising total capacity to 3.4 billion litres. The refinery’s management acknowledges that higher crude inventories are necessary when relying on imports, as external supplies may have longer lead times and greater logistical complexities. Devakumar Edwin, Vice President for Oil and Gas at Dangote Industries, confirmed that four of the new storage tanks are nearing completion. He reiterated that the decision to import crude stems from persistently low supply levels from the NNPC.
Although the naira-for-crude program promises significant long-term benefits, its initial phase faces implementation hurdles. While the NNPC is expected to deliver 385,000bpd to the Dangote Refinery under this arrangement, it remains unclear whether these volumes have been consistently supplied. The Federal Government plans to review the program in April 2025 to assess its impact and make necessary adjustments. In the meantime, industry experts caution that the refinery’s dependence on imports could continue until Nigeria’s overall crude production increases and distribution mechanisms are refined to meet domestic refining needs efficiently.
The Dangote Refinery’s reliance on imported crude oil underscores broader structural issues within Nigeria’s oil and gas sector. Despite being a major crude oil producer, Nigeria’s refining capacity has historically lagged behind domestic consumption needs, leading to a heavy dependence on imported refined products. The successful operation of large-scale refineries like Dangote’s offers a pathway to reversing this trend, but it also highlights the complexities of managing supply chains and optimizing resource allocation in a dynamic global market. As the refinery ramps up production and more domestic refineries come online, Nigeria’s refining landscape will require careful coordination between regulators, producers, and refinery operators to ensure sustainable growth and energy security.
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