Dangote Refinery is set to stop the supply of petroleum products to the Nigerian market following stalled negotiations over the naira-for-crude oil deal with the Nigerian National Petroleum Company (NNPC) Limited.
Sources close to the matter revealed that the refinery’s decision stems from the discontinuation of an agreement that previously allowed it to purchase crude oil in naira. As a result, the refinery will now focus on exporting its petroleum products internationally, as it currently sources crude oil exclusively from the global market, paying in U.S. dollars.
The naira-for-crude agreement, which was initially designed to support domestic fuel availability and stabilize fuel prices in Nigeria, has officially ended. The deal had enabled Dangote Refinery to buy crude in naira while supplying refined petroleum products to local marketers in the same currency.
On March 10, reports emerged that NNPC had discontinued the arrangement with Dangote Refinery and other local refineries, signaling a shift in government policy regarding crude oil allocation to domestic refineries.
However, NNPC’s Chief Corporate Communications Officer, Olufemi Soneye, later clarified that the deal, which commenced in October 2024, was still in effect but was scheduled to expire by the end of March 2025. He further noted that discussions were ongoing regarding the possibility of renewing the agreement under revised terms.
Since October 2024, NNPC has reportedly supplied over 48 million barrels of crude oil to Dangote Refinery. In total, the refinery has received approximately 84 million barrels since it officially began operations in 2023, significantly contributing to Nigeria’s domestic fuel supply.
The initial goal of the naira-for-crude deal was to reduce Nigeria’s reliance on expensive imported petroleum products and ensure a more stable and affordable fuel supply for the Nigerian market. However, with the current standoff, concerns are growing about potential disruptions in fuel distribution, a possible increase in pump prices, and a heightened risk of fuel scarcity in the country.
Many industry analysts and stakeholders are closely monitoring the situation, as the decision by Dangote Refinery to halt domestic fuel supply could have far-reaching economic implications for businesses, transportation, and overall consumer costs in Nigeria.