NNPCL, Dangote Refinery in Talks Over Naira-for-Crude Deal Renewal
The Nigerian National Petroleum Company Limited (NNPCL) has commenced discussions with Dangote Petroleum Refinery to renew the naira-for-crude agreement, as the initial contract nears expiration on March 31, 2025.
In a statement issued on Monday, NNPCL refuted claims that it had suspended the naira-based crude sales agreement until 2030, emphasizing that negotiations for a new deal are already underway. The company reiterated its commitment to supplying crude to local refineries under mutually agreed terms.
Since the agreement’s commencement in October 2024, the 650,000-barrel-per-day Dangote Refinery has received approximately 48 million barrels for refining. In total, 84 million barrels have been supplied since the facility began operations in 2023. The deal remains subject to crude oil availability.
Government Reaffirms Commitment to Naira-for-Crude Policy
Zacch Adedeji, Chairman of the Technical Sub-Committee on the naira-for-crude initiative, affirmed that the policy remains in force. He dismissed speculations of its termination, stating that the arrangement has proven beneficial to the Nigerian economy by stabilizing local fuel supply and reducing foreign exchange dependency.
Adedeji also highlighted the continued inclusion of local refineries in the domestic crude oil allocation, with the Nigerian Upstream Petroleum Regulatory Commission ensuring compliance with the Domestic Crude Oil Obligations outlined in the Petroleum Industry Act.
Modular Refineries Urge Government to Fulfill Commitments
Eche Idoko, Publicity Secretary of the Crude Oil Refinery-Owners Association of Nigeria, emphasized that the renewal of the deal aligns with the government’s initial plan. He urged authorities to honor their commitment to supplying 27,000 barrels per day to modular refineries, stressing the role these facilities play in stabilizing fuel prices.
According to Idoko, while the pilot phase of the agreement prioritized Dangote Refinery due to its ability to produce petrol, the next phase should incorporate other local refiners, especially those producing diesel, which significantly impacts transportation costs.
Crude Oil Supply and Payment Analysis
Data from NNPCL’s reports to the Federation Account Allocation Committee indicate that between October and December 2024, Dangote Refinery received crude oil worth approximately ₦486.31 billion ($373.76 million). Transactions were settled in naira, with payments based on the exchange rate advised by Afrexim Bank. However, as of February 2025, a balance of $126.99 million (₦199.96 billion) remained outstanding.
The agreement follows a structured credit facility, with payments due 45 days from the date of crude oil delivery. Analysis of crude supply records revealed significant fluctuations in allocations, with October 14, 2024, marking the highest single-day supply of 598,125 barrels, while the lowest was recorded on October 30, with just 5,000 barrels.
In November, only two transactions were approved, supplying a total of 798,374 barrels at $75.82 per barrel. December saw an increase in supply, with 799,737 barrels delivered on December 2 at $74.87 per barrel, while another batch of 233,401 barrels was received on December 11 at $76.21 per barrel. A pending shipment of 956,061 barrels was deferred to January 2025.
With negotiations underway for a new contract, stakeholders anticipate that the revised agreement will not only extend the naira-for-crude initiative but also expand its scope to include more local refineries, ultimately enhancing Nigeria’s energy security and economic stability.