The Nigerian National Petroleum Company Limited (NNPC) will supply crude oil to the Dangote Petroleum Refinery in naira for an initial period of six months, subject to review by the Technical Sub-Committee on Domestic Sales of Crude Oil in Local Currency.
Sources from both the committee and the Dangote refinery confirmed that the naira-for-crude arrangement is set to last for six months initially, as crude oil, being an international commodity, is typically priced in dollars.
On Tuesday, Bloomberg reported that the Federal Government plans to deliver up to 400,000 barrels of Nigerian crude oil per day to the Dangote refinery over the next two months, totaling 24 million barrels by the end of November 2024.
However, oil marketers stated they had not received any official communication from NNPC or Dangote about the alleged cessation of NNPC as the sole off-taker of petrol from the refinery.
Reports emerged suggesting NNPC was no longer the exclusive off-taker of petrol from Dangote, but neither company confirmed this despite inquiries. In response, some depots paused sales of petrol in anticipation of a price increase, though operations resumed later when no price hike occurred.
The Independent Petroleum Marketers Association of Nigeria (IPMAN) also announced that NNPC had reopened its portal for IPMAN members to purchase petrol, which had previously been inaccessible.
Regarding the naira-for-crude deal, sources emphasized that it is set to last six months, with crude oil still being awaited by the Dangote refinery. An official from Dangote indicated that while the deal is welcomed, many are unaware of its temporary nature.
The Federal Government had earlier announced the sale of crude oil and refined products in naira as of October 1, 2024, following a directive from the Federal Executive Council. The move is aimed at reducing pressure on the naira, cutting unnecessary transaction costs, and boosting the availability of petroleum products nationwide.
The Technical Sub-Committee on Domestic Sales of Crude Oil in Local Currency explained in September that the naira-for-crude initiative allows the NNPC to supply approximately 385,000 barrels of crude per day to the Dangote refinery, which will be paid for in naira. However, officials have clarified that the deal is not permanent and will be subject to review after six months.
As Bloomberg reported, the delivery of up to 400,000 barrels of crude daily to Dangote could disrupt the Atlantic oil market, potentially reducing Nigeria’s crude exports and tightening the West African crude market in the fourth quarter of 2024.
Concerns about a potential petrol price hike arose after rumors that NNPC might no longer be the sole off-taker of Dangote’s petrol. This led some depots to temporarily halt sales, though operations resumed after the Dangote refinery and NNPC remained silent on the matter.
IPMAN also noted that it was waiting for official notification from Dangote to off-take petrol from the refinery.
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