The Federal Government will commence the delivery of up to 400,000 barrels of Nigerian crude oil per day to the Dangote Petroleum Refinery under a naira- for-crude agreement, according to Bloomberg.
This is an arrangement that will result in the supply of 24 million barrels of crude oil between October and November 2024.
The deal marks a significant step in Nigeria’s efforts to bolster local oil refining capacity and reduce dependency on fuel imports.
With this increased supply, Dangote’s 650,000-barrel-per-day refinery, the largest in Africa and Europe, is expected to reshape Nigeria’s oil market, potentially reducing the country’s crude exports to less than 1 million barrels per day.
According to Bloomberg’s cargo allocations, Dangote’s refinery will take 13 to 14 shipments from Nigeria’s typical monthly program of 50 cargoes, tightening the West African crude market in the fourth quarter of 2024.
Analysts predict that the increased local processing capacity will significantly reduce Nigeria’s crude exports and lessen the country’s reliance on oil product imports.
With Dangote Refinery currently operating at 60-70% capacity, it is expected to reach full capacity soon, which would advance Nigeria’s long-term goal of reducing costly gasoline and diesel imports.
