Dangote-NNPC deal hits turbulence over crude shortfall

The bold deal between the Dangote Petroleum Refinery and Nigerian Nationwide Petroleum Firm Restricted is going through challenges, because the refinery skilled a crude oil provide shortfall of roughly 79.53 million barrels between October 2025 and mid-March 2026, based on findings by The PidomNigeria.

Knowledge obtained from an impeccable senior administration supply inside the refinery indicated that the power, which requires roughly 19.77 million barrels of crude month-to-month to function at full capability, obtained considerably decrease volumes in the course of the evaluation month.

The official argued that, below the Petroleum Industries Act, the export of crude earlier than assembly native demand was clearly prohibited, stressing that the $20bn Lekki-based plant had been grappling with insufficient crude volumes, whereas the nation, by way of NNPC, continued to export a few of its oil.

A breakdown of the figures reveals that the refinery is meant to get about 19.77 million barrels of crude month-to-month, but it surely 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. For March, solely 3.6 million barrels had been delivered between the first and fifteenth.

In whole, crude provided inside the five-and-a-half-month interval stood at 29.21 million barrels, in comparison with an estimated 108.74 million barrels required for a similar period. This interprets to a provide efficiency of about 26.9 per cent, indicating that greater than three-quarters of the refinery’s crude wants weren’t met.

At finest, provide hovered under one-third of required volumes, leaving a shortfall of roughly 79.53 million barrels. Utilizing the typical market value of Bonny Gentle crude, provided by the Central Bank of Nigeria, the monetary influence of this shortfall is critical. Bonny Gentle bought for $66.15 per barrel in October 2025, $65.22 in November, $68.05 in January 2026, and $72.33 in February. Taking the typical of those 4 months, the crude value stood at roughly $67.94 per barrel.

At this value, the 29.21 million barrels provided to the refinery had been price about $1.98bn. In the meantime, the 79.53 million barrels not provided represented an estimated $5.40bn in crude worth that Dangote refinery couldn’t entry. In whole, the refinery’s crude requirement for the five-and-a-half-month interval would have amounted to roughly $7.39bn at common market costs.

Additional evaluation confirmed that month-to-month deliveries constantly lagged behind demand. Even in November, the best provide month, what was delivered was 6.45 million barrels, representing about 32.6 per cent of the refinery’s month-to-month requirement.

In October, the availability of 4.55 million barrels accounted for roughly 23 per cent of demand, whereas December’s 4.30 million barrels represented about 21.7 per cent. January’s 5.65 million barrels translated to roughly 28.6 per cent, and February’s 4.66 million barrels stood at about 23.6 per cent of required volumes.

The March 1 to fifteen provide of three.60 million barrels, when put next with half-month necessities, additionally confirmed that deliveries remained under anticipated ranges. In all, the information indicated that month-to-month provide ranged between about one-fifth and one-third of the refinery’s wants, underscoring a persistent hole in feedstock availability.

The event highlights ongoing challenges surrounding crude provide to home refiners, notably as Nigeria seeks to scale up native refining capability and cut back dependence on imported petroleum merchandise.

In October 2024, the naira-for-crude deal between the Dangote refinery and NNPC was launched as a coverage initiative that enables the refinery to buy crude oil in naira relatively than in US {dollars}. The association was designed to ease strain on Nigeria’s overseas change reserves, stabilise the native foreign money, and help home refining by guaranteeing a gentle provide of crude to native processors.

Beneath the settlement, NNPC provides crude oil to the Dangote refinery, which in flip sells refined petroleum merchandise in naira inside the home market, serving to to retain worth inside the native economic system and probably decreasing gasoline costs. The deal initially lined a six-month interval and has since been prolonged by way of new provide agreements, though challenges resembling crude provide shortfalls and pricing dynamics have continued to check its effectiveness.

Earlier, the Dangote refinery had repeatedly lamented that it was not getting sufficient crude domestically for its operations. Because the Iran-US struggle continues to disrupt world oil provide, the Dangote refinery has effected a number of gasoline value will increase, elevating petrol pump costs above N1,300 per litre in the meanwhile.

Defending these value hikes, the Dangote refinery stated in a press release that native crude producers had been refusing to provide feedstock to its facility, forcing it to rely extra on imported crude.

In response to the corporate, the refinery additionally obtained simply 5 cargoes each month from the nationwide oil firm as a substitute of 13 cargoes, including that the cargoes had been paid for at worldwide market costs.

“Whereas we obtain about 5 cargoes a month from NNPC, which we pay for in naira, these cargoes are priced at worldwide market costs plus premium and fall wanting the 13 cargoes which we require to help gross sales into Nigeria.

“The excessive crude value is compounded by the truth that Nigeria’s upstream producers have failed to provide crude oil to the refinery as required below the Petroleum Business Act, forcing us to supply a considerable portion by way of worldwide merchants who cost a further premium,” it said.

However the NNPC stated it had intensified efforts to make sure a gentle crude oil provide to the Dangote refinery as a part of strikes to stabilise gasoline availability throughout the nation. This got here amid heightened world oil market volatility occasioned by the strain within the Center East and rising reliance on native refining to fulfill Nigeria’s petroleum product demand.

Talking throughout a current webinar, the Managing Director of NNPC Retail Restricted, Hubb Stokman, stated the nationwide oil firm stays central to making sure provide safety by way of its statutory position.

“NNPC stays dedicated to its statutory position, in fact, as a provider of final resort, ensuring of the soundness and continuity of provide of petroleum merchandise throughout the nation,” he stated.

Stokman defined that the corporate is working intently with the Nigerian Midstream and Downstream Petroleum Regulatory Authority and different stakeholders to ensure an uninterrupted provide of crude and refined merchandise nationwide.

He famous that with established provide channels, together with home manufacturing and imports the place mandatory, the NNPC is positioned to take care of steady product availability.

“We’re assured that with established provide channels, each with the manufacturing and imports functioning successfully consistent with the Petroleum Business Act, we will take all the mandatory measures to ensure satisfactory crude provide and uninterrupted availability of merchandise nationwide,” he said.

The PidomNigeria experiences that amid the surge in gasoline costs occasioned by the strain within the Center East, the NNPC deliberate to supply third-party crude for the Dangote refinery.

Dependable sources on the NNPC, who pleaded anonymity as a result of sensitivity of the matter, had confirmed to our correspondent that the corporate is leveraging its world crude buying and selling community to supply third-party crude for the 650,000-barrel Lekki refinery.

In response to the supply, the NNPC would promote the crude to the refinery at costs which are aggressive with prevailing worldwide market charges, ruling out calls by some stakeholders that the Federal Authorities ought to promote feedstock to native refineries at charges designed domestically to defend Nigeria from the worldwide value rise.

“Leveraging our world crude buying and selling community, we’re sourcing third-party crude for the refinery at costs which are aggressive with prevailing worldwide market charges,” an official stated.

One other supply instructed The PidomNigeria that the NNPC is totally dedicated to supporting home refining, particularly the Dangote refinery. He added that, going by the prevailing agreements between the NNPC and Dangote, the NNPC will proceed to facilitate crude provide to the power, even within the face of short-term constraints.

“Because the nationwide oil firm entrusted with safeguarding Nigeria’s power safety, NNPC Restricted stays totally dedicated to supporting home refining, together with the Dangote Petroleum Refinery. Inside the framework of our present agreements, we proceed to facilitate crude provide to the refinery within the face of short-term availability constraints,” he defined.

Our correspondent gathered from different sources inside the nationwide oil firm that there was actually a shortfall as a result of some quantity of NNPC’s day by day crude output had been front-sold up to now.

“Certainly, there’s a shortfall, but it surely wasn’t deliberate. You already know that some volumes have been front-sold up to now. That’s inflicting some type of distortion, however that doesn’t imply the NNPC won’t meet up. The corporate is taking a look at different various sources,” it was stated.

The push to strengthen crude provide to native refineries comes as Nigeria more and more depends upon home refining capability, notably from the Dangote refinery, to scale back reliance on imports and enhance power safety.

As native oil refiners in Nigeria complain of persistent crude shortages, the nation exported an estimated 306 million barrels of crude oil between January and October 2025, based on figures from the Central Bank of Nigeria.

The information reveal that whereas Nigeria produces substantial volumes of crude, the majority of it’s earmarked for export, leaving home refineries struggling to acquire satisfactory feedstock.

Between January and October, the CBN knowledge reveals that Nigeria’s crude manufacturing amounted to roughly 443.5 million barrels, averaging about 1.45 million barrels per day over the interval.

Cumulatively, whole exports over the ten months reached roughly 306.7 million barrels, accounting for almost 69 per cent of whole manufacturing. This left roughly 137 million barrels out there for the home market.

Talking in an interview with The PidomNigeria, the Nationwide Publicity Secretary of the Crude Oil Refiners Affiliation of Nigeria, Eche Idoko, decried the lack of native refineries to safe crude for manufacturing. Idoko stated a modular refinery like Opac couldn’t get crude, and it stopped manufacturing for months.

In response to Idoko, native refineries have the capability to provide greater than their present output, blaming the dearth of sufficient feedstock for the present output. “We’ve the capability to provide way over what we’re producing now. The problem has at all times been insufficient feedstock,” he said.

Idoko said that some modular refineries like OPAC produce about 10 per cent of their capacities, whereas some shut down resulting from an absence of crude oil.

In the meantime, gasoline entrepreneurs just like the Petroleum Merchandise Retail Outlet Homeowners Affiliation of Nigeria and the Unbiased Petroleum Entrepreneurs Affiliation of Nigeria have referred to as on the Federal Authorities to provide sufficient crude to Dangote and different native refineries to spice up home refining.

The entrepreneurs stated petrol would have jumped to N2,000 per litre if not for the Dangote refinery.