A directive from President Bola Tinubu instructing the Nigerian National Petroleum Company Limited to sell crude oil to the Dangote Petroleum Refinery and other local refineries in naira will result in a monthly requirement of approximately N1.7tn worth of crude oil for the Dangote Refinery.
The Special Adviser to the President on Information and Publicity, Bayo Onanuga, confirmed this development via his official X handle following the directive issued on Monday by Tinubu to NNPC.
The decision was taken by the Federal Executive Council on Monday to ensure stability in both fuel prices and the dollar-naira exchange rate.
An analysis based on industry reports indicates that the Dangote refinery, with an estimated cost of $20bn and located in Lekki, Lagos, may require around N1.7tn worth of crude oil monthly if NNPC fulfills the President’s mandate.
The average cost of crude oil in 2024 is approximately $83 per barrel according to data from Statistica, a leading global statistical firm.
Alhaji Aliko Dangote, President of Dangote Industries, mentioned that the refinery aims to achieve a production capacity of 500,000 barrels per day by August, scaling up to 550,000bpd by December 2024.
With a refining capacity of 500,000bpd and an average crude oil price of $83 per barrel, the plant would require about $41.5m worth of crude oil daily, equivalent to N56.55bn based on the average exchange rate of N1,362.6/$ in 2024.
Thus, following the President’s directive for NNPC to supply crude oil to Dangote and other local refineries in naira, the refinery is projected to consume about N1.7tn worth of crude oil monthly.
Industry Responses
Chief Ukadike Chinedu, National Public Relations Officer of the Independent Petroleum Marketers Association of Nigeria, stressed the importance of NNPC meeting the President’s order amid efforts to increase crude oil production in Nigeria.
Eche Idoko, Publicity Secretary of the Crude Oil Refiners Association of Nigeria, highlighted the potential benefits of selling crude in naira to local refineries, anticipating a positive impact on petrol prices and the strength of the naira against the dollar.
Further Developments at the Dangote Refinery
During a recent tour of the refinery, Dangote disclosed that the facility is fully operational, with an anticipated annual revenue of over $26bn.
He outlined the refinery’s progress, including the commencement of trial runs in January 2024, with plans to reach production capacities of 500kbpd by August, 550kbpd by year-end, and 650kbpd by early 2025, while gasoline production is slated to begin in July.
Dangote emphasized the refinery’s capabilities, including its dedicated loading gantries, marine facilities, polypropylene plant, and substantial storage capacity.
The refinery is poised to produce 53 million litres of petrol daily and has the potential to meet domestic demands while allowing for surplus exports.
NNPC’s Objective
NNPC aims to boost crude oil production to two million barrels per day by year-end to cater to both domestic needs and exports, with the country’s daily production already showing an increase according to the Nigerian Upstream Petroleum Regulatory Commission.
Group Managing Director of NNPC, Mele Kyari, expressed confidence in meeting the production target during a meeting with Maritime Stakeholders, reaffirming NNPC’s commitment to achieving this goal.