The Nigerian government is set to deliver up to 400,000 barrels of crude oil per day to the Dangote Petroleum Refinery under the recently launched naira-for-crude agreement. According to a report by Bloomberg, this arrangement will supply a total of 24 million barrels of crude between October and November 2024.
The refinery, which is the largest in Africa and Europe with a capacity of 650,000 barrels per day, will significantly increase its reliance on Nigerian feedstock, disrupting the West African oil market. This shift is expected to reduce Nigeria’s crude exports, potentially bringing them below 1 million barrels per day.
Ronald Hodgson, an analyst from FGE, noted that the West African crude market could become much tighter in the fourth quarter of the year as a result of these allocations to Dangote. The refinery, already operating at 60-70% capacity, is expected to reach full operation within a few months.
The Nigerian National Petroleum Company Limited (NNPC) reached an agreement with Dangote under which NNPC will supply crude to the refinery in exchange for exclusive rights to distribute the refinery’s gasoline production. This could help Nigeria reduce its costly imports of oil products, advancing a long-held national goal.
As Dangote’s refinery ramps up production, its local demand for Nigerian crude is expected to decrease the country’s exports, reducing its involvement in the global Atlantic oil market. This development may lead to a shrinkage in gasoline and diesel imports into the West African region.
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