NNPC doubles Dangote crude supply to 10 cargoes

Operators in Nigeria’s downstream oil sector have projected potential price relief as the Dangote Petroleum Refinery confirmed that crude oil deliveries from the Nigerian National Petroleum Company Limited doubled in March, boosting prospects for improved fuel availability.

The operators, however, noted that the price relief would be guaranteed if the government reduced the price of crude supplied to the Dangote refinery, and they commended the increase in oil volumes supplied to the $20bn Lekki-based plant by NNPC last month.

Nigeria’s push to stabilise domestic fuel supply received a boost as the Dangote Petroleum Refinery disclosed that crude oil deliveries from NNPC doubled in March, amid global supply disruptions triggered by tensions in the Middle East.

Africa’s richest man and President of the Dangote Group, Aliko Dangote, revealed in a report by Bloomberg on Tuesday that the refinery received 10 cargoes of crude oil from the state-owned oil firm in March, compared to an average of about five cargoes monthly since late 2024.

Dangote said the shipments included six cargoes paid for in naira and four in dollars, under the crude supply arrangement between the refinery and the NNPC.

“Nigeria doubled crude supply to Dangote Refinery in March as Africa’s top oil producer moved to shore up fuel availability after the Iran war disrupted Middle East shipments. Last month, they gave us six cargoes with payments in naira and four cargoes with payments in dollars,” he stated.

The development comes as Nigeria moves to shore up local fuel production following disruptions in global oil supply chains caused by the recent US-Israel attack on Iran, which has affected crude flows from the Middle East.

The increase in crude allocation signals a strategic shift by the Federal Government to prioritise domestic refining capacity and reduce exposure to volatile international markets, a move industry operators say could support gradual price moderation if sustained.

Last week, reports indicated that NNPC had increased crude oil supply to the Dangote refinery, allocating seven cargoes for May loading to boost domestic fuel production.

Two trader sources had told Reuters that the latest allocation marked an increase from the five cargoes the refinery had been receiving in previous months. However, officials of the petroleum refinery later said they were unaware of claims that seven crude cargoes had been allocated to the plant for May.

Meanwhile, despite the latest improvement, Dangote noted that the refinery is still operating below its full capacity, as it requires about 19 cargoes of crude monthly to run optimally.

“The supply has improved, but it is not yet at the level we need. We still have to import crude from the United States and other African countries to meet our requirements,” he said.

The refinery, widely regarded as Africa’s largest, has increasingly relied on imports to bridge the shortfall, raising concerns about cost pressures in the downstream sector. Dangote warned that limited access to locally produced crude, particularly from international oil companies operating in Nigeria, is driving up operational costs.

According to him, many of the oil firms prefer to sell crude to international traders rather than supply directly to the refinery, forcing the plant to buy back Nigerian crude at higher prices.

“Some of the international oil companies would rather sell to traders. So, we end up buying our own crude at a premium. The higher we pay, the higher the cost of petroleum products will be, because we have to pass on the cost,” he explained.

The refinery’s growing role in regional energy supply has also come into sharper focus, as several African countries increasingly depend on its output amid global uncertainties.

Dangote disclosed that the refinery exported about 17 cargoes of petroleum products to other African nations in March alone, underscoring its emergence as a key supplier on the continent. “Many African countries now rely on us for their petroleum products, especially with the disruptions in the Middle East,” he said.

Beyond fuels, the refinery is also ramping up production of polypropylene, a key industrial material used in plastic manufacturing and automotive components, which Dangote described as being in short supply globally. “The demand for polypropylene is very high, and it is currently scarce because of what is happening in the Middle East,” he added.

The crude-for-naira deal between the NNPC and the Dangote refinery, signed in October 2024, was designed to enhance local refining, conserve foreign exchange, and stabilise fuel prices in Nigeria. However, implementation has faced challenges, including inconsistent crude supply and competition from international traders.

The refinery, with a capacity of 650,000 barrels per day, is expected to significantly reduce Nigeria’s dependence on imported refined petroleum products, which have historically strained the country’s foreign reserves.

Recent geopolitical tensions in the Middle East have further highlighted the importance of domestic refining, as disruptions in global supply chains continue to affect fuel availability and pricing worldwide.

While increased crude allocation to the Dangote refinery is a step in the right direction, sustained supply and improved cooperation with oil producers will be critical to achieving full operational capacity and long-term energy security.

Commenting, the Chief Executive Officer of Petroleumprice.ng, Jeremiah Olatide, said the delivery of 10 crude cargoes in March signals improved supply to local refineries, but warned that Nigerians may not feel the benefit through lower pump prices without government intervention.

Olatide said, “The 10 crude cargoes supply recorded in March is a good development because it indicates more crude supply and, by extension, more fuel availability. But without Federal Government intervention through crude subsidy to the Dangote refinery and other local refineries, Nigerians will continue to experience availability but unaffordability, as petrol and diesel prices are poised to hit N1,500 per litre and N2,000 per litre at the pump.”

He further explained that the pricing structure of crude supplied locally remains tied to international benchmarks, limiting the possibility of immediate price relief for consumers. “The six cargoes paid for in naira are still priced using international benchmarks, so Nigerians should not expect any drop in pump prices. What the Federal Government should do now is introduce crude subsidy,” he said.

Olatide warned of looming pressure in the downstream market, noting that diesel prices had already crossed a critical threshold at the depot level. “As I speak, diesel prices at the depot have just crossed N2,000 per litre, so there is a crisis ahead,” he added.