The Dangote Petroleum Refinery and some modular refineries in Nigeria may spend about $8.56bn to import an estimated 122,400,000 barrels of crude oil to achieve full operational capacity in six months, The TheNigerian reports.

This means the refiners may spend about $1.43bn monthly on the importation of crude oil into Nigeria.

The plants may spend this much amid the uncertainty surrounding the sustainability of the naira-for-crude policy between the Nigerian National Petroleum Company Limited and the Dangote refinery, coupled with concerns about the Domestic Crude Supply Obligation of the Federal Government.

This came as it was discovered that the meeting that was earlier scheduled on Monday between the Technical Sub-Committee on the Naira-for-Crude Policy, Dangote refinery, and other government officials did not hold as planned.

Insiders familiar with the workings of the committee said the meeting was rescheduled and may be held before the Sallah break.

“The NUPRC (Nigerian Petroleum Upstream Regulatory Commission) is not done with the assignment given to it by the committee. Hence, the meeting could not be held today.

“They are asking for more time. Hopefully, the committee can reconvene before the Sallah holiday,” a senior government official who works with the committee told our correspondent in confidence due to the lack of authorisation to speak on the matter.

The Dangote refinery has a capacity of 650,000 barrels per day, and the plant had repeatedly made it known that it was importing and would continue to import crude. With the latest uncertainty in the naira-for-crude deal, the plant would rely heavily on imported crude.

Another domestic refinery that is also making efforts to import crude from the US is the Edo Refinery, with a capacity of 30,000 barrels per day. The plant has sought product offtake from a US-based crude supplier, according to information from modular refiners on Monday.

It was further gathered that while other modular refineries were making alternative plans to get the commodity, the Dangote and Edo refineries would require about 680,000bpd crude daily.

This translates to about 20.4 million barrels in 30 days (one month), and 122.4 million barrels in six months. At the average cost of $70/barrel for Brent crude, it means the two plants may spend about $8.56bn to import the commodity in six months.

The National Publicity Secretary of the Crude Oil Refinery-owners Association of Nigeria, Eche Idoko, in an exclusive interview on Monday, stated that sourcing raw materials from alternative suppliers remains their sole viable option for refiners.

He said domestic refiners now find themselves effectively stranded due to the government’s failure to ensure product offtake under the domestic supply obligation or the naira-based agreement.

He revealed that the situation has forced the 30,000 Edo refinery to deepen discussions with a crude supplier from the United States of America to secure an offtake deal.

He said other refineries that don’t have the financial muscle are no longer operational.

Idoko said, “Edo refinery, which is trying to expand its plant to 30,000 barrels per day, is in talks with crude suppliers from the United States. Others, apart from Walter Smith refinery and Aradel, who are momentarily relying on crude produced from their fields, are more or less stranded. Other modular refineries have not been able to refine a litre in the last six to eight months.”

Currently, modular refineries operating in the country include the Walter Smith modular refinery, Aradel, the Omsa Pillar Astex Company refinery, the Edo refinery and the Duport modular refinery. Clairgold and Azikel refineries are at an advanced stage in their construction.

Idoko emphasised that the government’s failure to allocate sufficient feedstock represents a major setback to its efforts to stabilise the sector and carries significant political consequences.

The national officer added, “Let it be clear that the news of Dangote or any local refinery procuring crude offshore through import as a result of failure or inability to source locally is a major dent in the efforts of this government to stabilise the sector.

“Whoever is frustrating the supply of crude to the local refinery is an enemy of this government and arming opposition with weapons ahead of the 2027 elections because the manner investors in local refining, including the Dangote refinery, have been treated would definitely be a factor to consider in the coming elections.”

The local refiners decried the difficult situation that had confronted them since last week after the abrupt alleged cancellation of the first phase of the naira-for-crude arrangement.

The refiners said they had anticipated being included in the second phase of the naira-for-crude deal after a successful pilot phase with the 650,000 barrels per day capacity Dangote refinery.

Sources, speaking on condition of anonymity due to a lack of authorization to discuss the matter, revealed that talks broke down because of issues related to crude availability from the Nigerian National Petroleum Company Limited.

Insiders familiar with the development said the national oil firm had allocated large volumes of crude to its foreign creditors to settle the loans acquired by the firm, making it difficult to sustain the naira-for-crude deal between NNPCL and Dangote refinery.

Analysed reports from the Nigeria Extractive Industries Transparency Initiative and the 2023 NNPC financial statements, had shown that 8.17 million barrels of crude had been pledged for different loan deals by the national oil firm monthly, with an additional $9.5bn forward oil sales deal in the offing.

In response to failed talks, the Dangote Petroleum Refinery announced a temporary halt in the sale of petroleum products in naira, citing an imbalance between its sales proceeds and crude oil purchase obligations, which are denominated in US dollars.

The company explained that its naira-denominated sales had exceeded the value of naira-priced crude it had received so far. As a result, it decided to temporarily align its sales currency with its crude procurement obligations.

“Dear valued customers, we wish to inform you that the Dangote Petroleum Refinery has temporarily halted the sale of petroleum products in naira. This decision is necessary to avoid a mismatch between our sales proceeds and our crude oil purchase obligations, which are currently denominated in US dollars.

“To date, our sales of petroleum products in naira have exceeded the value of naira-denominated crude we have received. As a result, we must temporarily adjust our sales currency to align with our crude procurement currency,” the firm announced last week.

The development means that domestic refiners have to turn to crude oil importation as an alternative strategy to ensure their continued operations. Dangote refinery imported 654,766 metric tonnes of crude oil in three days after the announcement.

The situation, which has drawn widespread condemnation and backlash from stakeholders and Nigerians alike due to the looming threat of a petrol price increase, has also led to severe business consequences, significantly impacting production costs.

Dealing a further blow to optimism around the reconsideration of the naira-for-crude deal, The TheNigerian exclusively gathered that the much-awaited meeting between both parties didn’t hold on Monday.

A source close to the committee revealed that the meeting didn’t hold because the Nigerian Upstream Petroleum Regulatory Commission was unable to present the options required by the committee on Monday.

The committee had mandated the NUPRC  to come up with possible options that would be reviewed by the panel.

“The meeting didn’t hold today as scheduled because the NUPRC hasn’t completed its findings as directed,” the official who sought anonymity disclosed.

The official was also silent on a likely date to reconvene but noted that the committee would meet soon.

As a result of this fallout, private depot owners in Lagos State have continued to consistently implement hikes in the loading costs of petrol and other refined petroleum products at their facilities.

Also, retail petrol stations in the Federal Capital Territory raised their pump prices by N42 or 4.67 per cent to N940 per litre on Monday.

A visit by our correspondent across various stations revealed that Conoil, located along Airport Road, increased its price to N940.

AYM Shafa raised its price by N20 to N920; Matrix effected a similar change to N920. Salbas, located along the same route, increased its price to N930 per litre.

However, the NNPCL and MRS filling stations sold their products at N880 per litre, which caused a long queue.

Similarly, an analysis of data obtained by our correspondent revealing petrol price movements at loading depots on Monday showed that Rainoil Depot increased its price from N860 to N870 per litre, and WOSBAB depot effected an increase to N870 per litre.

Pinnacle Depot made a similar price change from N860 to N870 per litre, while Aiteo and Nipco changed their prices from N856 and N860 per litre, respectively, to N870.

The price of Premium Motor Spirit (petrol) may be on a downward slope if the crude oil prices continue to slip.

The TheNigerian reports that this will also be strengthened as the naira maintains its stability against the dollar in the foreign exchange market.

Oil prices fell about two per cent to a 12-week low this week amid reports that OPEC+ will proceed with a planned oil output increase in April.

Brent futures fell $1.19, or 1.6 per cent, to settle at $71.62 a barrel, while the United States West Texas Intermediate crude fell $1.39, or two per cent, to settle at $68.37.

Reuters reports that those were the lowest closes for Brent since December 6 and WTI since December 9.

It was reported that the Organisation of the Petroleum Exporting Countries and allies like Russia, known as OPEC+, decided to proceed with a planned April oil output increase.

Players in the Nigerian downstream oil sector have said the crude oil price and the exchange rate are the major determiners of the costs of refined petroleum products.

Last week, the Dangote refinery reduced its ex-depot PMS price from N890 per litre to N825.

The Nigerian National Petroleum Company Limited followed suit by matching Dangote’s price, sparking what many described as a price war.

An economist, Paul Alaje, said the price slash of petrol is sustainable and that it should go below N700 per litre considering the current market realities.

With the fall in prices, Alaje said the only challenge will be if the price of crude oil goes up in the international market due to a global crisis.

“It is sustainable to reduce petrol prices to N700 based on today’s reality of the exchange rate. The challenge we may have is a global crisis that makes the price of crude oil go up. If that happens, we are going to see the difference. But for now, we are seeing relative stability,” Alaje said on Channels Television.

He added, “As of today, our computation reveals that PMS should be around N795 to N820 per litre.”

The National President of the Petroleum Products Retail Outlet Owners Association of Nigeria, Billy Gillis-Harry, has insisted that the price of petrol will continue to fluctuate based on the foreign exchange rates and international crude oil prices.

However, as lower crude oil prices mean affordable fuel for an average Nigerian, the current price is below the $74 per barrel projected by the Federal Government in the 2025 budget.

The Dangote Petroleum Refinery is awaiting up to 12 million barrels of crude oil from the United States, the Africa Report reported on Monday.

The refinery resorted to crude importation as local supply challenges hindered the new $20bn refinery’s push to reach full refining capacity.

Recall that the refinery plans to reach its 650,000 barrels per day capacity in June this year.

However, low local crude supply from the Nigerian National Petroleum Company Limited is currently a challenge to this plan to ramp up daily production.

The 12 million barrels of crude has already left the United States and will land in Nigeria next month, according to the report.

“About 12 million barrels of crude have departed the US and should arrive in Nigeria by February,” an insider source told The Africa Report.

The TheNigerian reports that the Dangote Petroleum Refinery is importing more crude oil as supply from the NNPC becomes insufficient for fuel production at the $20bn Lekki-based facility.

Officials at the plant said the facility has ramped up production to about 500,000 barrels per day, with the target of hitting the 650,000bpd mark by June this year.

While affirming that the naira-for-crude deal is still on as directed by President Bola Tinubu last year, sources told our correspondent that the facility will have to import more crude to meet its target.

The NNPC is reportedly struggling to supply 350,000bpd to the Dangote refinery from the 450,000bpd crude meant for Nigeria’s local consumption.

With its current production capacity of 500,000bpd, officials said there is a need to look beyond the shores of Nigeria for the feedstock.

It was said that the feedstock needed by the refinery daily cannot be solely supplied by the state-owned oil company, NNPC.

“Currently, we are at 500,000bpd; we will ramp to 650,000 by midyear. You know what it means? So, it is a normal process to source crude oil anywhere it is available,” an official at the plant told The TheNigerian.

Recall that in July, President Tinubu ordered the NNPC to sell crude oil to local refineries in naira.

In October, the committee supervising the naira-for-crude deal commenced the sale of crude to only the Dangote refinery in naira, saying it would sell to only petrol-producing refineries.

However, with the Port Harcourt and Warri refineries coming on stream, more refineries would be considered for the naira-for-crude arrangement.

According to the crude oil production forecast of producing oil companies and the refining requirement of functional refineries in Nigeria signed by the Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission, Gbenga Komolafe, the Dangote refinery would require 550,000 barrels of a blend of Nigerian crude oil daily, 17.05 million barrels monthly, and 99.55 million barrels between January and June 2025.

The Dangote refinery is already building eight more tanks to store imported crude. The facility is planning to stockpile imported crude oil as local supplies become unreliable.

Officials of the refinery were quoted as saying that low crude supply from the NNPC “is driving import dependence.”

The building of eight additional tanks will see crude storage capacity at the refinery jump by 41.67 per cent to 3.4 billion litres.

“Importing crude from other countries instead of buying locally means that our crude stockpiles will have to be higher,” the Vice President in charge of the oil and gas business at Dangote Industries, Devakumar Edwin, was quoted as having said recently.

In May 2024, the refinery reportedly issued a term tender for the purchase of two million barrels of West Texas Intermediate Midland crude monthly for 12 months starting in July last year, amounting to 24 million barrels of crude in one year.

The Dangote refinery currently supplies petrol, diesel, and aviation fuel to Nigeria and other countries.

The National President of the Petroleum and Natural Gas Senior Staff Association of Nigeria, Festus Osifo, has projected that the cost of Premium Motor Spirit (petrol) may rise soon if crude oil continues to increase in price.

Osifo said this at the PENGASSAN’s National Executive Council Meeting on Thursday in Lagos.

He called for better exchange rate management, warning of potential price hikes as crude prices rebound.

“The crude price rose to $80 per barrel today. Without exchange rate improvements, PMS prices will increase in the coming weeks,” Osifo stated.

He also pointed out that the exchange rate collapse was behind high fuel prices nationwide, despite the commencement of the operations of domestic refineries, though not at full capacities.

He dismissed misconceptions about refining processes, emphasising that achieving a quality Premium Motor Spirit requires multiple refining stages.

Osifo, said, “The old Port Harcourt refinery is functional, and there is significant progress at the Kaduna and Port Harcourt refineries. Refineries globally engage in blending operations; it is a normal part of the process.”

On the high cost of PMS in Nigeria, the PENGASSAN official said it was due to the fluctuations in the exchange rate, stressing its impact on Nigeria’s economy.

“The price of PMS is directly linked to our weak naira. If the exchange rate improves to below N1,000 to a dollar, PMS could sell for N500–N600 per litre,” he noted.

Comparing Nigeria to countries like Venezuela and Zimbabwe, he highlighted the critical role of currency management.

“The oil and gas business is conducted in USD (United States dollar), from equipment to expatriate salaries. Weak currency translates to higher costs, including PMS,” he added.

He also debunked claims that local refining would drastically lower prices, explaining that cost margins are essential.

“Producing locally does not mean selling below cost. Even farmers calculate their production costs before adding margins,” Osifo emphasised.

In another development, Osifo criticised Nigeria’s 2025 budget of ₦49tn (approximately $30bn), labelling it insufficient to address the country’s challenges and inadequate for a nation of over 230 million people.

“The budget of $30bn is abysmally low for a country like Nigeria, especially when you compare it with nations like South Africa, which has a population of about 60 million but operates on a budget of over $120bn,” he stated.

Osifo emphasised the need for Nigeria to harness its abundant natural and mineral resources to expand its revenue base and reduce dependence on loans.

•Facility now producing 500,000bpd as officials look beyond Nigeria to meet demand for product

The Dangote Petroleum Refinery is planning to import more crude oil as supply from the Nigerian National Petroleum Company Limited becomes insufficient for fuel production at the $20bn Lekki-based facility.

Officials at the plant said the facility has ramped up production to about 500,000 barrels per day, with the target of hitting the 650,000bpd mark by June this year.

While affirming that the naira-for-crude deal is still on as directed by President Bola Tinubu last year, the sources, who spoke in confidence due to lack of authorisation to speak to the press, maintained that the facility will have to import more crude to meet its target.

For the 650,000-capacity refinery, the NNPC is reportedly struggling to supply 350,000bpd from the 450,000bpd crude meant for Nigeria’s local consumption.

With its current production capacity of 500,000bpd, officials said there is a need to look beyond the shores of Nigeria for the feedstock.

According to them, the claim is not that the NNPC cannot supply crude, but that the feedstock needed by the refinery daily cannot be solely supplied by the state-owned oil company.

Asked if the refinery plans to import more crude now that the NNPC refineries are coming back on stream, one of the impeccable sources at the plant replied, “Of course!

“This is a 650,000 barrels per day capacity refinery. And as you know, we are also ramping up. You see, maybe by the middle of the year, we will hit 650,000. Do you know what 650,000bpd means?“

Another source corroborated this, saying, “It is not that anybody is saying NNPC cannot do it. No! But you look at what we have. We are not a 200,000bpd refinery. We are talking about 650,000 barrels.

“Currently, we are at 500,000bpd; we will ramp to 650,000 by midyear. You know what it means? So, it is a normal process to source crude oil anywhere it is available.”

In another chat with our correspondent, a consultant to the refinery boasted that the refinery game is for the ’big boys’, saying the refinery is one of the largest in the world.

“It is not that anybody is saying NNPC cannot do it. The game is up, and the game is for the ’big boys’.

“How many 650,000-capacity refineries do you have in this world? Even in the entire Europe? Have you seen the OPEC report? They said the refinery is affecting their PMS market in Europe. Of course, the eagle has landed,” he stated.

On the burn rate of Dangote petrol, the consultant explained, “The whole thing is simple. You know we are producing the Euro 5 standard. So, the quality is bound to be high. That’s what Nigerians are experiencing in the burn rate of our petrol.”

Naira-for-crude deal

As Nigeria’s refining capacity increases, the 450,000 barrels of crude oil allocated for local refineries is no longer enough.

This is as the Nigerian Upstream Petroleum Regulatory Commission revealed that the Dangote refinery, the Port Harcourt refinery, and six others would need 770,500 barrels for daily fuel production.

From data the NUPRC sourced from the Nigerian Midstream and Downstream Petroleum Regulatory Authority, the country’s refining capacity is put at 974,500 barrels per day, taking a look at only functioning refineries.

Recall that in July, President Bola Tinubu ordered the NNPC to sell crude oil to local refineries in naira.

“The Federal Executive Council has approved that the 450,000 barrels meant for domestic consumption be offered in Naira to Nigerian refineries, using the Dangote refinery as a pilot. The exchange rate will be fixed for the duration of this transaction,” Tinubu’s spokesman, Bayo Onanuga announced last year.

In October, the committee supervising the naira-for-crude deal commenced the sale of crude to only the Dangote refinery in naira, saying it would sell to only petrol-producing refineries.

However, with the Port Harcourt and Warri refineries coming on stream, more refineries would be considered for the naira-for-crude arrangement.

The NUPRC said 123.5 million barrels of crude would be needed by eight refineries in the first six months of 2025.

The refineries are: Dangote refinery, Port Harcourt refinery, Warri refinery, Kaduna refinery, Opac refinery, Waltersmith refinery, Duport Midstream Company Limited, Aradel refinery and Edo refinery.

According to the crude oil production forecast of producing oil companies and the refining requirement of functional refineries in Nigeria signed by the NUPRC Chief Executive, Gbenga Komolafe, the Dangote refinery is forecasted to need 550,000 barrels of a blend of Nigerian crude oil daily, 17.05 million barrels monthly, and 99.55 million barrels between January and June 2025.

Opac refinery requires 5,000bpd; Waltersmith needs 4,500bpd; Duport needs 2,000bpd while Edo refinery requires 1,000bpd.

Others are: Aradel refinery, 7,000bpd; Port Harcourt refinery, 60,000bpd; Warri refinery, 75,000bpd, and Kaduna refinery, 66,000bpd.

The TheNigerian learned that the first phase of the naira crude sale would be for six months.

In April, the Federal Government would review the programme to ascertain its success or otherwise.

Already, the Dangote refinery is already building eight more tanks to store imported crude.

The $20bn refinery is planning to stockpile imported crude oil as local supplies become unreliable.

Officials of the refinery were quoted as saying that low crude supply from the Nigerian National Petroleum Company Limited “is driving import dependence.”

The building of eight additional tanks will see crude storage capacity at the $20bn refinery jump by 41.67 per cent to 3.4 billion litres.

“Importing crude from other countries instead of buying locally means that our crude stockpiles will have to be higher,” the Vice President in charge of oil and gas business at Dangote Industries, Devakumar Edwin, was quoted as having said.

“So we have started building eight additional crude tanks to hold a billion litres, over and above our original storage capacity. Four of them are nearing completion,” Edwin added, saying crude supply from the NNPC is “still very low”.

With the implementation of the naira-for-crude initiative, the NNPC is expected to supply about 385,000 bpd of crude oil to the Dangote refinery to be paid for in naira. However, it could not be immediately confirmed if this has been the case.

Experts have argued that as Nigeria ramps up crude production, local refineries may have to resort to importation.

Nigeria’s crude oil production has surpassed 1.5 million barrels per day (mbpd) for the first time in four years, surpassing its December 2024 quota set by the Organisation of Petroleum Exporting Countries (OPEC).

The output, which is excluding condensates, signifies a resurgence that is crucial for Nigeria’s economy, heavily reliant on oil revenues amid ongoing reforms aimed at boosting production capacity.

OPEC had previously set Nigeria’s production quota at 1.5 mbpd, which the country has now successfully met. This

According to tanker tracking data compiled by Bloomberg, Nigeria’s output rose by 40,000 bpd to reach 1.51 million bpd, marking its highest production level in four years.

Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri,  on Monday, highlighted key achievements in the oil sector under President Bola Tinubu’s administration.

He emphasised that crude oil production has risen significantly from one million barrels per day (bpd) to 1.8 million bpd, including condensates.

Taking to his official X (formerly Twitter) account, Lokpobiri explained that upon assuming office, President Tinubu issued a directive to boost Nigeria’s crude oil production. The minister noted that this mandate served as the foundation for the ministry’s subsequent accomplishments.

Lokpobiri further stated that within the first 18 months of Tinubu’s administration, the government succeeded in attracting foreign investments and fostering peace in oil-producing communities across the Niger Delta.

The country, which had faced challenges maintaining production, capping at 1.3 million bpd in 2023, closed the year with a significant improvement, exceeding OPEC’s quota.

Despite this achievement, Nigeria’s production still fell short of the 2024 budget projection by 500,000 barrels. This gap has compelled the nation to intensify efforts to diversify its revenue base, relying more on taxes and customs duties to bridge the deficit.

In August 2023, OPEC retained Nigeria’s production quota at 1.5 million bpd as part of its global oil price stabilisation strategy.

Further progress was reported in October when the Nigerian National Petroleum Company (NNPC) Limited disclosed achieving 1.8 million bpd. This milestone was attributed to enhanced security measures aimed at reducing oil theft and curbing pipeline vandalism.

However, the NNPC did not specify whether the 1.8 million bpd figure referred solely to crude oil or included blended and unblended condensates, which are excluded from international sales.

While Nigeria experienced a production boost in December, the overall output of OPEC members saw a notable decline, primarily due to strategic cuts by the United Arab Emirates (UAE) aimed at stabilising global oil prices, as per Bloomberg data.

The UAE scaled back its oil exports to an 18-month low, with state-owned oil company ADNOC reducing crude oil cargo allocations for select Asian customers in January and February.

Iran’s oil production fell by 40,000 barrels per day (bpd) to 3.32 million bpd in December. Despite this drop, the country’s output remains near its highest level in six years, even as potential challenges loom from the incoming U.S. administration.

Libya, however, demonstrated a strong recovery from recent political turmoil, increasing its production by 40,000 bpd to 1.23 million bpd. This marks the country’s highest production level in over a decade.

 

 The Nigerian National Petroleum Company Limited may continue servicing its crude-for-loan obligations till 2029 as the demand for oil by domestic refineries increases.

NNPCL’s debt burden arises from several crude-for-loan agreements that have tied volumes of the country’s oil production to various financial commitments.

This is as the local demand for crude has continued to rise following the coming onstream of the Port Harcourt and Warri refineries, alongside the mega $20bn Dangote Petroleum Refinery located in Lagos.

Also, the Nigerian Upstream Petroleum Regulatory Commission revealed last week that the Port Harcourt, Dangote, Warri, and other functional refineries would require 123,480,500 barrels of crude oil between January and June 2025.

This means the demand for crude by indigenous refiners has continued to rise amid the crude-for-loan obligations of the national oil company.

Findings showed that the NNPCL has pledged 272,500 barrels per day of crude oil through a series of crude-for-loan deals totalling $8.86bn.

Pledging 272,500 barrels daily means that about 8.17 million barrels of crude will be used for different loan deals by the national oil firm monthly.

This is according to an analysis of a report by the Nigeria Extractive Industries Transparency Initiative and the NNPCL’s financial statements.

Under these deals, notable projects include Project Panther, Project Bison, Project Eagle Export Funding (Original, Subsequent, and Subsequent 2 Debts), Project Yield, and Project Gazelle.

According to The TheNigerian’s findings, NNPC has already repaid at least $2.61bn in loans, representing 29.4 per cent of the total credit facility, while $6.25bn or 70.6 per cent, remained outstanding as of June 2024.

One of the most notable agreements, Project Panther, involves a $1.4bn facility secured in 2022 from a consortium of commercial banks and Chevron Nigeria Limited.

With a maturity date of 2029, the loan carries a seven-year tenor and has seen NNPCL draw $359m so far.

However, no repayment has been made as the deal allows for a moratorium period before principal repayments commence.

In exchange, 23,500 barrels of crude oil per day have been pledged as collateral, under financing terms that include a 3-month SOFR rate, a 5.5 per cent margin, and a one per cent liquidity premium.

In 2021, NNPCL secured a $1.04bn pre-export financing facility, known as Project Bison, to acquire a 20 per cent equity stake in the Dangote Refinery.

The deal, fully repaid by 28 June 2024, required NNPCL to pledge 35,000 barrels of crude oil per day.

While this marked a significant milestone in funding a critical piece of infrastructure, it also underlined the challenges posed by using oil assets as collateral, as it constrained the crude oil available for local refineries.

Another significant financial arrangement is Project Eagle, which encompasses multiple tranches of export funding.

The original $935m tranche, obtained in 2020 with a five-year maturity tenor, required the pledge of 30,000 barrels of crude oil per day and was fully repaid by September 15, 2023.

However, subsequent tranches extended the financial strain. A $635m tranche, similarly pledged and repaid by September 2023, gave way to a larger $900m tranche obtained in 2023, with a maturity date in 2028.

Repayment of this tranche commenced in June 2024 following a 12-month moratorium, with 21,000 barrels of crude oil per day pledged as collateral.

Adding to this heavy debt portfolio is Project Gazelle, a forward sale agreement secured by NNPCL in December 2023.

This $3bn facility, which matures in five years, required NNPCL to pledge 90,000 barrels of crude oil per day from its Production Sharing Contract assets to cover future tax and royalty obligations.

By the end of 2023, $2.25bn had been drawn from this facility, with repayments scheduled to commence by mid-2024.

This agreement further demonstrates NNPCL’s deepening reliance on leveraging crude oil production to meet financial and fiscal obligations.

The company’s commitments do not end there. Project Yield, designed to support the Port Harcourt Refinery Company, involves a $950m facility obtained in 2022 and maturing in 2029.

This agreement pledges an even larger volume of crude oil—67,000 barrels per day—and has repayments scheduled to begin in December 2024.

While the project aims to improve local refining capacity, it has also contributed to the significant diversion of crude oil towards debt servicing.

Operators speak

Reacting to the development, operators in the sector called on the oil company to ensure that crude is made available to domestic refineries.

They, however, expressed hope that the crude-for-loan deals of the national oil firm would not adversely impact crude supply to local refineries.

The Independent Petroleum Marketers Association of Nigeria called for caution in the collection of loans in exchange for crude oil.

IPMAN, however, debunked the idea that these deals would impact crude supply to domestic refineries.

The IPMAN National Publicity Secretary, Chinedu Ukadike, noted that the Organisation of Petroleum Exporting Countries has laid out standards and guidelines to ensure adequate crude allocation for domestic refineries.

He said, “Yes, we are aware of these issues but in terms of international standards of crude supply, there is always a domestic percentage that is meant for local refineries and must be fulfilled. Those are not part of the ones to be allocated for loans.

“There is a standard OPEC practice in terms of the export of crude oil and there is also a standard percentage for domestic production so whatever they are trying to get in exchange for loans will be under the export allocation and not domestic needs.

“We are not foreseeing any issue concerning that yet but the government still has to be careful.”

Meanwhile, an energy expert, Prof. Yemi Oke, said it is not mandatory for local refineries to source their feedstock from the NNPC, saying any refinery can get crude oil either locally or internationally.

However, Oke maintained that the Nigerian crude became attractive because of the naira-for-crude deal.

“Under the law, refineries are not under any legal obligation to source for crude from Nigeria. They are business entities, their crude could come from anywhere in the world. The Dangote refinery has been sourcing crude from other countries. Nigeria’s crude is Bonny light, top-notch. But then, it’s about blending.

“You can import pure crude from another country if you have the technical knowledge or equipment to blend it into a top-brand product. So, the refineries—Dangote refinery, the modular refineries that we have, the BUA that is coming on-stream, NNPC’s Port Harcourt and Warri refineries—don’t have, as a matter of legal obligation, a duty to buy Nigerian crude oil.

“But because of the crude for Naira policy, it becomes attractive for them to buy crude from the government. The Nigerian government, under their domestic crude obligation, which is a policy, has only set aside a quantity of the crude oil sourced locally for the refineries. And the government has also started taking steps to scale up crude production capacity from 1.5 million barrels per day to 2 million barrels per day,” he stated.

The don stressed that if the country sustained the current reforms and dispositions, it should be able to produce above 2 million barrels per day.

With this, he expressed confidence that the refineries would never be short of feedstock and the NNPC would have more crude to sell outside the country.

In an interview with our correspondent, the National Vice Chairman of the Independent Petroleum Marketers Association of Nigeria, Hammed Fashola, said the country only needs to ramp up oil production to avoid a decline in foreign exchange earnings.

Fashola did not agree that local crude supply to refineries would have a negative effect on the nation’s economy.

“I don’t think it will impact negatively on the Nigerian economy because when you look at the way the government is going in terms of crude production, it is fighting hard to increase production. If the government can increase production, local crude supply would not have any negative effect on our economy,” Fashola stated.

He commended the military and other security agencies for their efforts in stemming the menace of crude theft, calling on the masses to support the fight against economic sabotage.

He appealed to the government to raise crude production to a level where it could satisfy local needs and sell to the international market.

Speaking, the Publicity Secretary of the Petroleum Products Retail Outlet Owners Association of Nigeria, Joseph Obele, argued that the government must prioritse crude supply to local refineries, or the facilities would become moribund.

According to him, local fuel production would reduce importation and the pressure on the naira would also decrease.

“If you look at our Petroleum Retrospect for last year, we stated that the government should prioritise the supply of crude oil to local refineries. We foresee a situation, a scenario where the local refineries will suffer a supply of crude oil. I think crude oil will be scarce to them because we are aware that a good degree of Nigerian crude oil has been given out as collateral for loans collected from international monetary organisations.

“So, given this, we want to see how the Federal Government can rearrange all those agreements as it concerns the appropriation of ratio sharing between the international oil companies and the Federal Government. Otherwise, the local refineries will be shut down due to a lack of crude oil. So, the Federal Government should prioritise local refineries,” he pleaded.

Stakeholders in Ideato North/South federal constituency of Imo State have described the rebounding of Port Harcourt and Warri refineries, transition of the Nigerian National Petroleum Company Limited (NNPCL) and increase in crude oil production as the greatest achievements of the national oil company’s Group Chief Executive Officer, Mele Kyari.

Therefore, the leaders passed a vote of confidence on Kyari for his efforts in reactivating the refineries, crude production, NNPC transition and the downstream oil sector generally.

Speaking at the end of the year media engagement, they hailed the NNPCL boss and the President/Chief Executive Officer of the Dangote Group, Aliko Dangote, for their role in turning the downstream sector around.

Their spokesperson, Maxwell Aleto, in a statement, commended Kyari’s role in the developments – transition of NNPCL, refineries’ reactivation and boost in crude production.

“We the stakeholders in Ideato federal Constituency after a careful observation of the turning points in the Nigerian energy sector, hereby passed a vote of confidence on the Group Chief Executive Officer of NNPCL Mele Kyari under whose leadership, the national oil company has witnessed a transition with refineries being reactivated and crude oil production surging.

“It is quite commendable that under Kyari’s watch, the Port Harcourt Refinery with two refining units capable of handling 210,000 barrels of crude oil per day (bpd) has been resuscitated.

“The NNPC Ltd had announced that the refinery has resumed crude oil processing. The company also confirmed that petroleum products from the refinery will soon be delivered to the market, marking a significant step toward boosting fuel supply in the country.

“Also comes the Warri Refinery which has a distillation capacity of 125,000 barrels per day (bpd) and includes a petrochemical plant that produces 13,000 metric tons per annum (MTA) of polypropylene and 18,000 MTA of carbon black.

“On December 30, 2024, the Nigerian National Petroleum Company (NNPC) Ltd and President Bola Tinubu announced that the Warri Refinery had resumed operations after being inactive for several years. The refinery is now running at 60% of its full capacity, marking a key step toward improving fuel production and supply in the country.

“Also worthy of our commendation is the President/Chief Executive Officer of the Dangote Group, Aliko Dangote who Refinery is the world’s largest single-train refinery with the capacity to process 650,000 barrels of crude oil per day which was inaugurated in May 2023.

“Since September 2024 that the refinery started producing petrol, it initially, supplied 25 million liters per day, with plans to gradually increase production to 35 million liters daily and is expected to play a major role in meeting Nigeria’s fuel needs and reducing the country’s reliance on imports.

“The results of these efforts by Kyari and Dangote are already with us as acknowledged by the Independent Petroleum Marketers Association of Nigeria who attributed the fierce competition between Nigeria’s two refineries owned by Dangote and NNPC Limited for the recent drop in the pump price of premium motor spirit, PMS, also known as petrol,” they stated.

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has set a crude oil production target of 367.5 million barrels for oil firms operating in the country for the first half of 2025.

This target aligns with Nigeria’s broader goal to enhance its oil output, which is projected to reach 2.06 million barrels per day by 2025, including condensates.

The Commission also announced that local refineries will require 770,500 barrels per day (bpd) of crude oil for effective operation in the first half of 2025.

This demand represents approximately 37 per cent of the projected daily production of 2,066,940 bpd during this period.

NUPRC aims to enhance domestic refining capacity and ensure a steady supply of crude to meet local needs, aligning with the Petroleum Industry Act’s provisions for sustainable energy management in Nigeria.

Despite recent increases in production, challenges such as theft and underinvestment remain significant hurdles for achieving these ambitious targets.

These figures were obtained in the document titled  “Crude oil production forecast of producing oil companies and the refining requirement of functional refineries in Nigeria the first half 2025”, released by the NUPRC on Wednesday.

According to the forecast, signed by the Commission chief executive, Gbenga Komolafe, the move is pursuant to Section 109 of the Petroleum Industry Act (PIA), 2021 and aimed at effective capacity utilisation of the nation’s domestic refineries by ensuring a consistent supply of crude oil.

The upstream regulator noted that “This comprehensive data provides insights into the projected crude oil needs for the refineries, crucial for understanding the energy landscape in Nigeria for the first half of 2025.”

It added that the forecast daily crude requirement for Refineries, which is 770,500 barrels per day, is about 37 per cent of the forecasted first half 2025 average daily production of 2,066,940 Bopd.

Recall that in October 2024, NUPRC launched Project 1 million Barrels which is expected to favourably impact the national production.

According to Komolafe, NUPRC is leveraging the capacity of upstream operators to meet the target daily production of 2,500,000 Bopd) in the short term.

“This strategic initiative aligns with Nigeria’s commitment to bolstering its domestic refining capacity and ensuring the sustainability of its oil industry. The first half of 2025 is expected to witness increased synergy between local refineries and producing companies, setting the stage for a more robust and self-reliant petroleum landscape in Nigeria”, he stressed.

The report also revealed that Port Harcourt Refinery, Dangote Refinery, Warri Refinery and other functional refineries will receive 123,480,500 barrels of crude oil between January to June 2025 which is the total crude requirement of refiners during the period.

The regulator estimated daily crude oil requirements for local refiners at 770,500 barrels per day and a monthly requirement of 23,812,000 barrels per month.

To meet the requirement, the NUPRC said it targets crude oil output to hit over two million barrels per day.

The production target is hinged on Project 1 million Barrels which was launched in October 2024.

The NUPRC is empowered by the PIA to ensure domestic crude supply to local refineries based on the ‘willing buyer, willing seller’ model.

The regulator said the move is pursuant to Section 109 of the Petroleum Industry Act (PIA), 2021 and it is aimed at effective capacity utilisation of the nation’s domestic refineries by ensuring a consistent supply of crude oil.

The forecast is for nine active refineries, according to the NUPRC.

A breakdown showed that the Dangote Refinery and Petrochemicals (FZE) requires 99,550,000 barrels from January to June 2025. The refinery’s daily requirement is 550,000mbpd while the monthly requirement is 17.05 million barrels.

The Warri Refinery has the second highest requirement estimated at 13,5875,000 barrels in the first half while the daily and monthly requirement are 75,000bpd and 2.325 million barrels respectively.

The Kaduna Refinery and Petrochemical Company Ltd have an estimated requirement of 3,960,000 barrels. The refinery’s daily requirement is 66,000bpd and 1,980,000 barrels.

Port Harcourt Refinery Company Ltd (Old) has a daily requirement of 60,000 barrels per day, monthly requirement of 1,860,000 barrels and a half year requirement of 2,868,000 barrels.

Port Harcourt-based Aradel Refinery is estimated to consume 1,267,000 barrels in the first half of 2025 while the daily need of the refinery is 11,000bpd and 215,000 barrels monthly.

OPAC Refineries in Delta State has a crude requirement of 5,000bpd, 150,000 barrels per month and 900,000 barrels in the first half.

Imo State-based Waltersmith Refinery and Petrochemical Company Ltd has a half year requirement of 814,500 barrels; a monthly and daily requirement of 139,000 barrels and 4,500 barrels per day.

Edo State-based Dupot Midstream Company Ltd has a half year, monthly and daily requirement of 360,000 barrels, 62,000 barrels and 2000bpd respectively.

Edo Refinery and Petrochemical Company Ltd has a half year requirement of 186,000 barrels, a monthly requirement of 31,000 barrels and a daily requirement of 1,000bpd.

“This strategic initiative aligns with Nigeria’s commitment to bolstering its domestic refining capacity and ensuring the sustainability of its oil industry.

“The first half of 2025 is expected to witness increased synergy between local refineries and producing companies, setting the stage for a more robust and self-reliant petroleum landscape in Nigeria.”