Naira-for-crude: We receive five cargoes monthly from NNPC – Dangote Refinery
Dangote Petroleum Refinery & Petrochemicals yesterday cleared air on the crude oil supply being received from the Nigerian National Petroleum Company Limited (NNPCL) under the naira-for-crude arrangement, disclosing that it receives five cargoes of crude monthly which are paid for in naira. However, it stated that this falls significantly short of the 13 cargoes required […]
Dangote Petroleum Refinery & Petrochemicals yesterday cleared air on the crude oil supply being received from the Nigerian National Petroleum Company Limited (NNPCL) under the naira-for-crude arrangement, disclosing that it receives five cargoes of crude monthly which are paid for in naira.
However, it stated that this falls significantly short of the 13 cargoes required each month to meet domestic demand.
The clarification is coming against the backdrop of the recent hike in pump price by Dangote Refinery following the surge in crude oil prices in the international market caused by the ongoing hostilities in the Middle East.
On Monday, Dangote Refinery adjusted its ex-depot price by N100, moving from N774 to N874 per litre. The development immediately rippled across retail outlets nationwide.
The development had raised questions about the naira-for-crude programme with some analysts calling for transparency in the programme.
The thinking in the industry was that Nigeria should have been insulated from the programme with sufficient local refining which Dangote Refinery has guaranteed.
Clearing air on this yesterday in a statement, Dangote Refinery further explained that the shortfall of eight cargoes are bought from other sources outside the country.
In addition, it stated that the NNPC cargoes are priced at international market rates plus a premium.
As a result, the company said it is compelled to source additional crude from local and international traders, procuring foreign exchange at prevailing open market rates to complete the purchases.
Dangote further explained that although it recently increased its ex-depot price of Premium Motor Spirit (PMS) by N100 per litre, it has absorbed about 20 per cent of the rising production costs to cushion the impact on Nigerians.
The refinery explained that the adjustment, which represents roughly a 12 per cent increase, was necessitated by sharp increases in global crude oil and freight prices triggered by the ongoing Middle East conflict.
According to the company, benchmark Brent crude rose by about 26 per cent within a short period, climbing above $84 per barrel.
It noted that Nigerian crude oil currently trades at a premium of between $3 and $6 per barrel above the Brent benchmark. When freight costs of approximately $3.50 per barrel are added, crude oil is landing at the refinery at between $88 and $91 per barrel. By contrast, crude previously landed at about $68 per barrel when its ex-depot petrol price was N774 per litre.
It also cited inadequate supply from upstream producers, despite provisions under the Petroleum Industry Act (PIA), as another factor contributing to its reliance on international crude purchases at added premiums.
Operating in a deregulated environment as a private enterprise, the refinery emphasised that its pricing reflects prevailing market conditions to ensure sustainability.
It stressed that selling below cost would undermine its ability to procure crude oil, sustain operations and guarantee uninterrupted supply to the domestic market.
Despite current pressures, the company maintained that local refining at scale remains critical to reducing Nigeria’s exposure to global supply disruptions, moderating foreign exchange demand and preventing severe fuel shortages during periods of international instability.
The refinery reiterated its commitment to transparency, operational efficiency and long-term energy security, assuring Nigerians that it remains focused on maintaining stable supply despite ongoing volatility in the global oil market.