Why Dangote Refinery Lacks Enough Crude Oil – Presidency

The Federal Government has attributed the persistent shortage of crude oil at the Dangote Refinery to Nigeria’s earlier forward sales of crude.

It acknowledged that the country is still grappling with the consequences of selling part of its oil production in advance.

Sunday Dare, Special Adviser to President Bola Ahmed Tinubu on Media and Public Communications, said the advance sales had limited the volume of crude available for domestic refining.

This is despite increased national production under the current administration.

Dare, who spoke on Trust TV’s 30 Minutes programme with Mannir Dan-Ali, however, admitted that he did not have the exact figures for the quantity of crude oil sold ahead of time.

“Why is it not getting enough? It is because part of our oil production has been sold ahead of time,” he said.

He explained why the privately owned refinery continued to experience supply difficulties despite the government’s efforts to support local refining.

His remarks come amid continuing disagreements over the implementation of the Federal Government’s naira-for-crude policy.

Introduced in 2024, the policy was made to enable domestic refineries to purchase crude oil in naira and supply petroleum products to the local market in the same currency.

The arrangement was intended to ease pressure on foreign exchange, reduce the cost of importing refined petroleum products and strengthen domestic refining capacity.

However, the Dangote Refinery has repeatedly complained that the quantity of crude supplied under the initiative falls short of its requirements.

It said the situation forced it to source additional supplies from international markets.

In March 2026, the refinery’s Chief Executive Officer, David Bird, said it was receiving only five cargoes monthly under the arrangement, against the 13 to 15 cargoes it required.

The dispute persisted in July, when the refinery said it was receiving about four million barrels monthly under the naira-for-crude arrangement.

This is compared with approximately 13 million barrels envisaged under the initiative.

The Nigerian National Petroleum Company Limited, however, maintained that it had allocated all available crude cargoes under the arrangement to the refinery.

It argued that actual deliveries were influenced by crude availability, nomination schedules and operational requirements.

The supply dispute has also had implications for the refinery’s foreign exchange requirements.

In July, the company began pricing some locally sold petroleum products in dollars, citing difficulties in securing adequate crude supplies through the naira-for-crude programme.

Dare said the Tinubu administration had introduced measures to improve domestic refining, including the naira-for-crude policy, which he said helped address the refinery’s difficulties in obtaining foreign exchange.

He argued that the policy was evidence of the President’s willingness to intervene to support local refining, despite the challenges associated with crude availability.

“Without the crude oil it needs, that refinery cannot operate,” he said.

The presidential aide also defended the government’s role in the establishment of the refinery.

He argued that federal support and the policy environment under Tinubu were important to its development.

He said the Federal Government had made substantial financial commitments to the project and that the refinery would have faced difficulties without access to foreign exchange.

However, he acknowledged that the facility still needed government support to secure adequate crude supplies.

Dare’s explanation comes against the backdrop of the government’s broader argument that increased domestic refining is essential to reducing Nigeria’s dependence on imported petrol, diesel and other petroleum products.

Nigeria has historically exported much of its crude oil while importing significant volumes of refined products, exposing the country to international prices, foreign exchange pressures and supply disruptions.

The Dangote Refinery, designed with a capacity of 650,000 barrels per day when originally commissioned and subsequently expanded, was expected to change that pattern by processing crude locally and supplying the domestic and export markets.

The refinery’s current installed capacity has since been reported at about 700,000 barrels per day.

But the availability of crude remains a central issue in determining how much of that capacity can be sustained with Nigerian feedstock.

In a separate interview on October 9, Finance Minister Taiwo Oyedele said Nigeria did not have enough crude oil available to meet the Dangote Refinery’s requirements and those of other domestic refiners.

Oyedele explained that total national production could not be equated with the volume available to the Federal Government.

He said this is because portions of the crude were allocated to investors and partners under production-sharing contracts and joint ventures, while other deductions covered production costs and royalties.

He said Nigeria did not have up to 700,000 barrels of uncommitted crude oil available to supply refiners, adding that increased production would be necessary to meet their requirements.

Dare, meanwhile, said Nigeria’s daily crude production had increased from between 800,000 and 900,000 barrels when Tinubu assumed office in May 2023 to between 1.7 million and 1.8 million barrels.

He attributed the increase partly to improved pipeline security, arguing that the country had made substantial progress in protecting its oil infrastructure and boosting output.

However, he did not provide the exact volume of crude sold in advance when asked during the interview.

The unresolved supply challenge highlights the difficulties facing the government’s drive to expand local refining, even as it points to rising production and policy interventions as evidence of progress in the oil sector.

Join Daily Trust WhatsApp Community For Quick Access To News and Happenings Around You.