The Nigerian government has announced that its naira-for-crude oil deal with the Dangote Petroleum Refinery will initially last for six months. This development is aimed at boosting local refining capacity and reducing reliance on foreign exchange.
According to sources from the Technical Sub-Committee on Domestic Sales of Crude Oil in Local Currency and the Dangote refinery, the six-month timeline is subject to review. The Federal Government is set to supply 400,000 barrels of crude oil daily to the refinery, with the arrangement expected to disrupt Nigeria’s crude exports and tighten the West African crude market.
Key Highlights:
- Naira-for-Crude Deal Duration: Six months in the first instance, subject to review.
- Daily Crude Supply: 400,000 barrels to Dangote refinery.
- Impact on Exports: Expected to substantially decrease Nigeria’s crude exports.
- Local Market Effects: West African crude market to become “substantially tighter”.
The naira-for-crude initiative, approved by President Bola Tinubu, aims to reduce pressure on the naira, eliminate unnecessary transaction costs, and improve petroleum product availability nationwide. The deal commenced on October 1, 2024, with the NNPC supplying 385,000 barrels per day to the Dangote refinery, payable in naira.
Meanwhile, the Independent Petroleum Marketers Association of Nigeria (IPMAN) has confirmed that the NNPC portal for purchasing petrol is now open to its members, allowing them to access products. IPMAN is awaiting notification from Dangote to commence direct petrol lifting from the refinery.
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