…Buys Nigerian Oil Abroad at Premium
Nigeria’s refining ambitions faced fresh scrutiny yesterday as the Dangote Refinery raised alarm over persistent shortfalls in crude supply, even as the Nigerian National Petroleum Company (NNPC) Limited signalled renewed momentum in upstream investments.
Chief Executive Officer of the Dangote Refinery, David Bird, disclosed that deliveries under the federal government’s crude supply arrangement have fallen significantly below agreed volumes, forcing the facility to source Nigerian crude from international markets at a premium.
Speaking on Arise Television, Bird said the 650,000 barrels-per-day refinery requires between 13 and 15 cargoes of crude monthly to meet domestic fuel demand. However, it is currently receiving only about five cargoes—roughly 30 per cent of its requirement.
The shortfall, he noted, is undermining the effectiveness of the Crude-for-Naira arrangement, a policy designed to supply crude to local refiners at international prices without exposing them to foreign exchange volatility.
While acknowledging that the initiative has helped ease pressure on Nigeria’s foreign exchange market, Bird stressed that its implementation has been inconsistent in both volume and quality allocation.
According to him, the refinery’s configuration is optimised for specific crude blends, and the failure to supply preferred grades has disrupted operational efficiency. More concerning, he revealed, is that the same Nigerian crude grades denied to the refinery are being exported and later repurchased by the company on the global market in dollars—often at premiums as high as $18 per barrel.
He described the situation as a value leak for Nigeria, as the price differential benefits international traders rather than the domestic economy.
Despite the constraints, the refinery has maintained operations by leveraging its flexible design, with 30 to 40 per cent of its feedstock now sourced from international markets. However, Bird warned that this exposes the plant fully to global price volatility, particularly amid geopolitical tensions that have driven up crude prices, freight rates and insurance costs.
He emphasised that the refinery operates strictly on commercial terms, dismissing claims that it enjoys subsidised crude. According to him, all crude is purchased at full international benchmark prices, with additional costs for transportation, insurance and logistics.
Bird called for greater transparency in crude allocation processes, arguing that a more consistent and efficient framework would reduce costs and improve domestic refining outcomes. He also urged the government to address broader structural challenges, including regulatory charges and the high cost of doing business.
While acknowledging the pressure of rising fuel prices on consumers, he expressed optimism that global oil market cycles would eventually ease pricing pressures.
Meanwhile, in a parallel development, NNPC signalled a potential rebound in Nigeria’s upstream sector, announcing that two major oil and gas projects are nearing Final Investment Decisions (FIDs).
Speaking at CERAWeek 2026 in Houston, NNPC’s Executive Vice President (Upstream), Udobong Ntia, said one of the projects is expected to reach FID before the end of the year, with another to follow shortly after.
Ntia attributed the renewed investor confidence to improved fiscal stability, regulatory clarity and reforms introduced under the Petroleum Industry Act (PIA) of 2021. He said these changes have helped reposition Nigeria as an attractive destination for global energy investment.
He noted that the country’s oil and gas sector is recovering from years of decline marked by low production, reduced capital inflows and widespread insecurity in the Niger Delta.
Recent progress, he said, includes the advancement of key projects such as TotalEnergies’ Ubeta development and Shell’s Bonga North and Iseni projects, which are now under execution after years of delay.
Highlighting Nigeria’s vast hydrocarbon potential, Ntia urged global investors to take advantage of emerging opportunities, assuring them of a more stable and commercially driven operating environment.
He also pointed to the growing role of technology in optimising production, noting that data analytics, artificial intelligence and machine learning could unlock additional value from Nigeria’s mature oil basins.
According to him, Africa—particularly Nigeria—is well-positioned to capitalise on shifting global energy dynamics, especially amid supply disruptions in other regions.
With upstream investments gathering pace and refining capacity expanding domestically, Ntia said Nigeria is poised to strengthen its position in the global energy market—provided ongoing reforms are sustained and operational bottlenecks are addressed.
