Nigeria’s downstream oil sector is cautiously optimistic about potential price relief following confirmation that crude oil deliveries to the Dangote Petroleum Refinery doubled in March. The development, announced by Africa’s richest man and Dangote Group President Aliko Dangote, signals a strategic effort by the Nigerian National Petroleum Company Limited (NNPC) to stabilize domestic fuel supply amid global disruptions caused by escalating tensions in the Middle East.
According to Dangote, the refinery received 10 cargoes of crude oil in March, compared to the usual five cargoes supplied monthly since late 2024. Six of the shipments were paid for in naira, while four were settled in dollars, reflecting the dual-payment arrangement agreed upon between the refinery and NNPC. “Nigeria doubled crude supply to Dangote Refinery in March as Africa’s top oil producer moved to shore up fuel availability after the Iran war disrupted Middle East shipments,” Dangote explained.
The refinery, located in Lekki and valued at $20 billion, is widely regarded as Africa’s largest and a cornerstone of Nigeria’s energy security strategy. With a capacity of 650,000 barrels per day, it is expected to significantly reduce Nigeria’s reliance on imported refined petroleum products, which have historically strained foreign reserves and exposed the economy to volatile international markets.
Despite the increase in supply, Dangote emphasized that the refinery is still operating below optimal capacity. To run at full strength, the plant requires about 19 cargoes of crude monthly. “The supply has improved, but it is not yet at the level we need. We still have to import crude from the United States and other African countries to meet our requirements,” he said.
Industry operators welcomed the increase in crude allocation but stressed that sustained supply and reduced pricing are essential for consumers to feel the impact. They argue that unless the government lowers the price of crude supplied to the refinery, Nigerians may continue to face high pump prices despite improved availability.
Jeremiah Olatide, Chief Executive Officer of Petroleumprice.ng, noted that while the delivery of 10 cargoes in March is a positive step, affordability remains a challenge. “The 10 crude cargoes supply recorded in March is a good development because it indicates more crude supply and, by extension, more fuel availability. But without Federal Government intervention through crude subsidy to the Dangote refinery and other local refineries, Nigerians will continue to experience availability but unaffordability, as petrol and diesel prices are poised to hit N1,500 per litre and N2,000 per litre at the pump,” he warned.
Olatide further explained that crude supplied locally is still priced using international benchmarks, limiting the possibility of immediate price relief. “The six cargoes paid for in naira are still priced using international benchmarks, so Nigerians should not expect any drop in pump prices. What the Federal Government should do now is introduce crude subsidy,” he added.
Dangote also highlighted challenges posed by international oil companies operating in Nigeria. Many prefer selling crude to international traders rather than supplying directly to the refinery, forcing the plant to buy back Nigerian crude at a premium. “Some of the international oil companies would rather sell to traders. So, we end up buying our own crude at a premium. The higher we pay, the higher the cost of petroleum products will be, because we have to pass on the cost,” he explained.
The refinery’s growing role in regional energy supply has also come into focus. Dangote revealed that the plant exported about 17 cargoes of petroleum products to other African nations in March, underscoring its emergence as a key supplier amid global uncertainties. “Many African countries now rely on us for their petroleum products, especially with the disruptions in the Middle East,” he said.
Beyond fuels, the refinery is ramping up production of polypropylene, a critical industrial material used in plastics and automotive components. Dangote noted that global demand for polypropylene is high, and supply has been constrained by Middle East instability. “The demand for polypropylene is very high, and it is currently scarce because of what is happening in the Middle East,” he added.
The crude-for-naira deal between NNPC and the Dangote refinery, signed in October 2024, was designed to conserve foreign exchange, enhance local refining, and stabilize fuel prices. However, implementation has faced challenges, including inconsistent supply and competition from international traders.
Recent geopolitical tensions, particularly the US-Israel attack on Iran, have disrupted global oil flows, reinforcing the importance of domestic refining capacity. Nigeria’s decision to increase crude allocation to Dangote reflects a broader strategy to reduce exposure to external shocks and strengthen energy security.
Still, the refinery requires consistent supply and stronger cooperation with oil producers to reach full capacity. Without these measures, Nigeria risks continued reliance on imports and exposure to global price volatility.
For consumers, the immediate concern remains affordability. Diesel prices have already crossed N2,000 per litre at the depot level, signaling looming pressure in the downstream market. Unless government intervention addresses crude pricing, Nigerians may continue to face high costs despite improved availability.
In summary, the doubling of crude deliveries to the Dangote refinery marks a significant step toward stabilizing Nigeria’s fuel supply. However, sustained supply, reduced crude pricing, and government intervention will be critical to translating availability into affordability. The refinery’s growing role in regional energy supply highlights its strategic importance, but challenges remain in achieving full capacity and delivering tangible relief to consumers.
