Dangote Refinery Eyes Crude Oil Imports as NNPCL Struggles to Meet Supply Demands
The Dangote Petroleum Refinery is set to seek crude oil imports due to insufficient local supply from the Nigerian National Petroleum Company Limited (NNPCL), despite the latter’s ramp-up in production. An anonymous official revealed to DAILY POST on Thursday that while Dangote Refinery has successfully increased its production capacity to 500,000 barrels per day (bpd), it is targeting a 650,000 bpd capacity by mid-2025, which will require sourcing crude oil from international markets.
Currently, NNPCL supplies Dangote Refinery with approximately 350,000 bpd out of the 450,000 bpd allocated for Nigeria’s domestic consumption. However, with production at Dangote’s refinery set to expand, the official confirmed that sourcing additional crude from abroad is inevitable. “At 500,000 bpd, we will have no choice but to look beyond Nigeria for crude feedstock,” the source explained.
Crude Supply Deal with NNPCL and Dangote Refinery
In a bid to boost domestic refining, the Nigerian government had approved a Naira-for-crude sales deal in July 2024, intended to facilitate the supply of crude to local refineries. This deal was expected to support a supply of 450,000 bpd for refineries, including Dangote’s. By October of the same year, the committee overseeing the deal requested NNPCL to begin supplying crude specifically for fuel production at Dangote Refinery.
With the revival of other key refineries like Port Harcourt and Warri, the Naira-for-crude agreement has expanded to cover more facilities. However, as Dangote’s refinery scales up, it remains clear that the local crude supply will not be sufficient to meet its rising production capacity. According to Devakumar Edwin, Vice President at Dangote Industries, importing crude oil from other countries means that Nigeria’s crude stockpiles will have to increase to account for the additional imports.
Challenges in Meeting Dangote Refinery’s Ambitious Goals
Dangote Refinery’s planned production boost to 650,000 bpd by mid-2025 is part of its broader strategy to become a key player in Africa’s oil refining sector. However, achieving this ambitious target hinges on securing a reliable and adequate supply of crude oil. Despite the Naira-for-crude deal with NNPCL, the refinery’s growing demand for feedstock underscores the gap between local production and refining capacity in Nigeria.
As Nigeria’s crude production continues to face challenges, including the need for further investments in upstream operations, Dangote Refinery is being forced to explore alternative sources to meet its supply needs. The shift to importing crude is likely to have significant implications for Nigeria’s oil industry, particularly regarding the country’s crude export volumes and domestic refining capabilities.
The Future of Nigeria’s Refining Industry
Looking ahead, the country’s refining industry faces both opportunities and obstacles. With the revival of several refineries and increased production targets at Dangote, Nigeria aims to reduce its dependence on imported refined products. However, without a consistent and sufficient supply of crude oil to meet the needs of these refineries, the dream of a fully self-sufficient refining sector may remain elusive.
As the Dangote Refinery prepares for its expansion, the question remains whether Nigeria can align its crude oil production with the demands of its growing domestic refining capacity.
