Dangote Refinery Pushes For Policy Renewal As Nigeria Eyes Naira-For-Crude Future

The six-month agreement between the Nigerian National Petroleum Company Limited (NNPCL) and Dangote Petroleum Refinery officially expired on March 31, 2025, without a renewal, leading to the suspension of the refinery’s sale of refined petroleum products in Naira. Despite this, Dangote Refinery has continued to process crude oil, with reports indicating a daily processing rate of approximately 400,000 barrels in 2025.

Significantly, 35% of the crude supply has come from international imports, including notable quantities from Brazil and Equatorial Guinea, reflecting a shift away from local supply constraints.

Sources close to the deal’s progress have revealed to The Punch that while the policy is under review, its potential impact on Nigeria’s economy—especially concerning fuel prices and the foreign exchange rate—remains a key consideration. “The initiative will likely continue due to its significant influence on fuel prices and other economic factors, such as the exchange rate,” said a source.

Introduced in October 2024, the Naira-for-Crude policy aimed to reduce Nigeria’s reliance on fuel imports, enhance fuel supply, and stabilize prices. However, no official agreement to extend the initiative has been made. As of now, NNPC has delivered 48 million barrels of crude oil under the arrangement, with a total of 84 million barrels since 2023.

A senior government official, speaking anonymously, stated that the committee overseeing the policy is awaiting recommendations from the Nigeria Upstream Petroleum Regulatory Commission before making further decisions.

Despite efforts to manage the supply under the Naira-for-Crude deal, Dangote Refinery has encountered difficulties, particularly with NNPC failing to meet its supply commitments. According to data from the Commodity Analysis System (CAS), NNPC delivered only about one-third of the promised 300,000 barrels per day, significantly affecting refinery operations.

As a result, Dangote Refinery has turned to alternative sources, including Brazil’s Petrobras, which delivered a cargo of Tupi crude on March 26, 2025.

A Dangote executive, speaking to S&P Global, expressed uncertainty regarding the future of the Naira-for-Crude policy, saying, “We are not even certain if it will be renewed or if it will proceed at all.” The executive also noted that the Naira-based pricing structure had placed financial strain on the refinery due to volatile exchange rates, stating, “It’s not commercially advantageous for us.”

In light of domestic supply challenges, the refinery has expanded its sourcing to global suppliers such as Brazil’s Petrobras and Equatorial Guinea. This shift highlights the strain in the relationship between Dangote and NNPC, particularly given NNPC’s underdelivery of crude oil supplies.

As negotiations continue, the future of the Naira-for-Crude deal remains uncertain. While NNPC is expected to supply crude oil to Dangote for April, the payment terms and overall continuation of the arrangement have yet to be agreed upon. NNPC has allocated seven crude oil cargoes for April, delivering approximately 245,000 barrels per day, but details regarding payment remain unsettled.