Given the complications the Dangote Refinery faces in sourcing crude locally, the organization has turned to Equatorial Guinea to buy crude.
- Dangote Refinery faces challenges in sourcing crude locally.
- The refinery has turned to Equatorial Guinea to buy crude.
- The Nigerian National Petroleum Company (NNPC) Limited has halted its naira-for-crude deal with local refineries.
The Nigerian National Petroleum Company (NNPC) Limited, earlier in the month, decided to halt its Naira-for-Crude deal with local refineries, an initiative that allowed local refineries to purchase crude from Nigeria in its local currency.
As a result, local refineries are forced to buy crude from its own market in USD, which can lead to some financial difficulties.
The Dangote refinery, in response, has decided to source some of its crude from foreign markets to cut down cost, including purchasing over three million barrels of crude from the United States since the beginning of the month.
A recent report as seen in the Punch, shows that the refinery, recently turned to Equatorial Guinea for fresh crude supplies.
The refinery is said to have bought its first cargo of Equatorial Guinea’s medium sweet, Ceiba crude, despite reports indicating that the NNPC supplied large shipments of additional crude to Dangote on Friday.
The supply aligns with the refinery loading gantry’s recent price drop from N825 per liter to N815 per liter, as seen in another report by the Punch.
Nonetheless, in the last week, the refinery secured the 950,000 barrel cargo that BP was loading on April 12–13, from Equatorial Guinea.
According to Argus, China usually purchases the majority of Ceiba exports.
Vortexa statistics showed that almost 18,000 barrels per day were released there last year, with three cargoes going to Spain and one to the Netherlands, as seen in the Punch.
This is hardly the first time the Dangote Refinery is buying crude from other African markets.
In February, Dangote acquired its first consignment of light sweet Saharan Blend crude from Glencore, in Algeria, a trading company, with deliveries scheduled for March 15–20.
Naira-for-crude debacle with the Dangote Refinery
The Nigerian National Petroleum Company (NNPC) Limited recently discontinued its Naira-for-oil program, which involves selling crude to regional refineries in the nation’s currency.
The report that the NNPC had forward-sold all of its crude, even though production levels were greater now than when the arrangement started almost six months ago, served as the basis for the decision.
“Forward-sold all its crude” indicates that the Nigerian National Petroleum Company (NNPC) Limited has already sold future petroleum output ahead of schedule, maybe in order to meet contractual commitments, pay off debts, or obtain quick cash.
Olufemi Soneye, spokesperson for the NNPC said in a recent statement that the Dangote refinery has had access to 48 million barrels of crude oil since the naira-for-crude agreement began in October 2024.
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“Under this arrangement, NNPC has made over 48 million barrels of crude oil available to Dangote Refinery since October 2024. In aggregate, NNPC has made over 84 million barrels of crude oil available to the Refinery since its commencement of operations in 2023,” Soneye noted.
There has been talks about negotiations between the NNPC and Dangote for a new Naira-for-Crude deal.
