As Dangote Refinery Turns to Imports, NNPC Engages in Oil-for-Loan Deals

Devakumar Edwin, the Executive Director of Dangote Group, recently stated that the Nigerian National Petroleum Company Limited (NNPCL) had already committed its crude to other entities, making it impossible to meet Dangote’s immediate needs.

Edwin also disclosed that the Dangote Petroleum Refinery is currently importing crude oil, with the first cargo expected in two weeks. 

However, he assured that this importation is temporary and that the refinery will receive its crude supply from NNPCL starting in November.

NNPCL’s Loan Commitments

On the other hand, NNPCL has been busy with its own deals. Last month, the oil company entered into a $3 billion crude oil-for-loan agreement with the African Export-Import Bank. 

This deal allows NNPC to pledge future oil production as repayment for the loan. 

Further, it was gathered that NNPCL has entered into crude oil supply commitments with other entities but has plans to supply Dangote Refinery in November.

Dangote’s Production Plans

Edwin also revealed that the firm aims to produce up to 370,000 barrels per day of crude, which will be refined into diesel and jet fuel. 

By the 30th of November, 2023, the plant is expected to produce Premium Motor Spirit, commonly known as petrol. The refinery aims to gradually increase petrol production to an impressive 650,000 barrels per day.

Market Reactions

Oil marketers have stated that the prices of diesel and jet fuel will only reduce when Dangote starts receiving crude oil from Nigeria. 

The National Controller of Operations for the Independent Petroleum Marketers Association of Nigeria, Mike Osatuyi, expressed optimism about the refinery’s production plans, stating it would mean an end to petrol importation.

While Dangote turns to temporary imports, NNPCL is engaged in oil-for-loan deals, raising questions about the synchronisation of Nigeria’s oil sector. However, both parties assure that come November, the refinery will run exclusively on Nigerian crude, marking a significant milestone for the country’s oil industry.