ALHAJI DANGOTE
By Frontline Reporters
The crude supply agreement between the Dangote Petroleum Refinery and the Nigerian National Petroleum Company Limited (NNPC) is facing fresh strain after the refinery recorded a crude oil supply shortfall of about 79.53 million barrels between October 2025 and mid-March 2026.
Data obtained from a senior management source within the refinery revealed that the $20bn Lekki-based facility, owned by Aliko Dangote, requires roughly 19.77 million barrels of crude monthly to operate at full capacity but received far less during the review period.
Figures show that the refinery received 4.55 million barrels in October, 6.45 million barrels in November, 4.30 million barrels in December, 5.65 million barrels in January, and 4.66 million barrels in February. Between March 1 and 15, only 3.6 million barrels were delivered.
Altogether, the refinery received 29.21 million barrels over the five-and-a-half-month period, compared with an estimated 108.74 million barrels required to sustain operations at full capacity.
This translates to a supply performance of about 26.9 per cent, leaving more than three-quarters of the refinery’s crude demand unmet.
Billions in crude value affected
At the average market price of Bonny Light crude, the financial implications of the shortfall are substantial.
According to data from the Central Bank of Nigeria, Bonny Light sold for $66.15 per barrel in October 2025, $65.22 in November, $68.05 in January 2026, and $72.33 in February, giving an average price of about $67.94 per barrel.
Based on this price, the 29.21 million barrels supplied were worth approximately $1.98bn, while the 79.53 million barrels not supplied represent an estimated $5.40bn in crude value the refinery could not access.
In total, the refinery’s crude requirement for the same period would have amounted to about $7.39bn at prevailing market prices.
Supply consistently below demand
Further analysis showed that monthly crude deliveries remained significantly below demand throughout the period.
Even in November, the highest supply month, the 6.45 million barrels delivered represented just 32.6 per cent of the refinery’s monthly requirement.
In October, supply accounted for roughly 23 per cent of demand, while December’s 4.30 million barrels represented about 21.7 per cent.
January deliveries stood at 28.6 per cent of required volumes, while February accounted for 23.6 per cent.
Naira-for-crude deal under pressure
The supply gap has raised fresh concerns about the naira-for-crude arrangement introduced in October 2024 between the NNPC and the Dangote refinery.
The policy allows the refinery to purchase crude oil in naira rather than US dollars, with the aim of easing pressure on Nigeria’s foreign exchange reserves and supporting domestic refining.
Under the deal, the refinery supplies refined petroleum products to the domestic market in naira, a move expected to stabilise fuel prices and strengthen the local currency.
However, refinery officials have repeatedly complained that insufficient crude supply has forced the facility to rely more on imported crude.
The company said it receives about five crude cargoes monthly from NNPC instead of the 13 cargoes required to meet domestic supply obligations.
“The high crude cost is compounded by the fact that Nigeria’s upstream producers have failed to supply crude oil to the refinery as required under the Petroleum Industry Act, forcing us to source a substantial portion through international traders who charge an additional premium,” the refinery stated.
NNPC pledges supply stability
Responding to concerns, the NNPC said it remains committed to ensuring a steady supply of crude oil to the refinery and maintaining fuel availability nationwide.
Speaking during a webinar, the Managing Director of NNPC Retail Limited, Hubb Stokman, said the national oil company was working with regulators and other stakeholders to ensure supply stability.
“NNPC remains committed to its statutory role as supplier of last resort, ensuring stability and continuity of petroleum product supply across the country,” he said.
According to him, the company is leveraging its global trading network to source third-party crude cargoes for the refinery at competitive international prices.
Export dominance amid local shortages
Despite the complaints by domestic refiners, Nigeria exported about 306 million barrels of crude oil between January and October 2025, according to figures from the Central Bank of Nigeria.
During the same period, the country produced roughly 443.5 million barrels, meaning about 69 per cent of output was exported, leaving only around 137 million barrels for the domestic market.
Industry stakeholders say the situation has constrained local refining operations.
The National Publicity Secretary of the Crude Oil Refiners Association of Nigeria, Eche Idoko, said several modular refineries were operating far below capacity due to crude shortages.
According to him, some facilities produce barely 10 per cent of installed capacity, while others have shut down operations entirely.
Oil marketers, including the Independent Petroleum Marketers Association of Nigeria and the Petroleum Products Retail Outlet Owners Association of Nigeria, have also urged the Federal Government to prioritise crude supply to local refineries.
They argued that without the Dangote refinery’s contribution to domestic supply, petrol prices could have climbed to nearly ₦2,000 per litre.
ADVERTISEMENTS
