Dangote Refinery to Stop Fuel Supply to Nigerian Market as Naira-for-Crude Deal Stalls

Dangote Refinery is set to stop supplying petroleum products to the Nigerian market due to stalled negotiations over the naira-for-crude agreement, sources have confirmed. However, the refinery will continue loading fuel for export as it currently sources all its crude stock from the international market in dollars.

The refinery has been selling to Nigerian marketers in naira under an agreement with the Nigerian National Petroleum Company (NNPC) Ltd., which allowed it to purchase crude in local currency. That agreement has now ended, impacting domestic fuel supply.

Earlier this month, reports indicated that NNPC had discontinued the naira-for-crude deal with Dangote Refinery and other local refineries. However, shortly after, Olufemi Soneye, NNPC’s chief corporate communications officer, clarified that the agreement, which began in October 2024, was set to expire at the end of March. He also stated that negotiations were ongoing for a new deal with Dangote Petroleum Refinery.

Since October 2024, NNPC has supplied over 48 million barrels of crude oil to the refinery, bringing the total to more than 84 million barrels since the facility began operations in 2023. The original agreement between the federal government and local refineries aimed to improve fuel supply, reduce reliance on costly petroleum imports, and lower pump prices by enabling transactions in naira.

With the failure to reach a new deal, Nigeria faces potential fuel shortages as Dangote Refinery shifts focus to exports, while marketers may have to rely more on imported products.