The Federal Government is weighing plans to cut the crude oil allocation to the Dangote Petroleum Refinery from its current 300,000 barrels per day unless Nigeria’s oil production sees a substantial boost. Eyes Of Lagos reports,
This move comes as part of the government’s naira-for-crude initiative, which seeks to ensure an equitable crude distribution among local refineries. The recent operational commencement of the Warri and Port Harcourt refineries—processing a combined 135,000 barrels per day—has prompted the review. Both refineries, previously neglected in favor of fuel imports, are now managed by the Nigerian National Petroleum Company Limited (NNPCL).
The naira-for-crude program, launched last year, allocated 450,000 barrels daily to domestic refineries, with Dangote Refinery receiving 300,000 barrels as part of an initial six-month pilot. However, with additional facilities like Kaduna and the BUA refinery expected to come online, the crude supply to Dangote Refinery will likely be reduced.
A source close to the matter explained, “The 300,000 barrels allocated to Dangote Refinery must now be shared among all refineries to meet growing domestic demand. Increasing crude production is the only sustainable solution.”
The initiative aims to stabilize foreign exchange rates and reduce petrol prices. According to the Crude Oil Refinery Owners Association of Nigeria (CORAN), the program has already led to lower fuel costs, with further reductions expected as refining capacity grows. However, CORAN has stressed the urgency of boosting crude oil production to meet escalating demand.
To enhance government revenues, the NNPCL has stopped selling crude on credit, now requiring upfront payments. This policy has drawn criticism from refiners, including Dangote Refinery, which may resort to importing crude at international market prices if local supply diminishes. Operating at full capacity, Dangote Refinery can process up to 650,000 barrels per day.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has projected that local refineries will require over 123 million barrels of crude between January and June 2025. To meet this demand, the government plans to increase daily crude production to over 2 million barrels, leveraging initiatives such as Project 1 Million Barrels.
These efforts align with Nigeria’s broader goals of reducing reliance on imported petroleum products and achieving fuel self-sufficiency. The first half of 2025 is expected to witness stronger collaboration between upstream producers and local refineries, paving the way for a more sustainable and competitive petroleum sector in the country.
