FG: Nigeria Lacks Sufficient Crude Oil to Meet Dangote Refinery’s Supply Needs

The Federal Government has acknowledged that Nigeria currently lacks sufficient uncommitted crude oil to meet the full supply requirements of the Dangote Petroleum Refinery and other domestic refiners, according to Taiwo Oyedele, the former chairman of the Presidential Committee on Fiscal Policy and Tax Reforms.

Oyedele explained that although Nigeria produces approximately 1.8 million barrels of crude oil daily, not all the oil belongs to the Federal Government, as production-sharing contracts and joint venture agreements require the output to be shared among the parties involved.

He said the volume available to the government is further reduced by production costs, royalties and other contractual obligations before the remaining profit oil is distributed.

According to him, these deductions significantly limit the quantity of crude oil the government can make available to domestic refineries.

“The reality is that today we do not have up to 700,000 free crude to give anyone, including Dangote,” Oyedele said.

His remarks highlight the challenges facing Nigeria’s efforts to ensure adequate crude oil supplies for the Dangote Refinery, which was established to strengthen domestic refining capacity and reduce the country’s dependence on imported petroleum products.

The refinery, located in Lekki, Lagos State, has been a major part of Nigeria’s ambition to process more crude oil locally. However, securing sufficient supplies of domestic crude remains an important issue for the facility and other refineries operating in the country.

Oyedele also explained that the Federal Government introduced the naira-for-crude arrangement to help stabilise the domestic petroleum market and support local refining. He said the policy had helped achieve some stability, although the available volume of crude oil remained insufficient to meet all domestic demand.

“That’s why when Mr President introduced the Naira for Crude, it was meant to help us gain some stability. And it has worked, but we don’t have enough quantity to give as of yet,” he added.

The former presidential committee chairman expressed optimism that the situation would improve as Nigeria increases its crude oil production and makes more barrels available for domestic use.

“As we ramp up production and we free up some barrels, we’ll get to a point where we’ll be able to give Dangote everything he wants and other refiners will be able to get enough,” he stated.

Oyedele further expressed hope that Nigeria would eventually process all the crude oil it produces within the country and export refined petroleum products instead of exporting crude oil.

Nigeria’s crude oil industry has faced several challenges, including oil theft, pipeline vandalism, production disruptions and difficulties in meeting production targets. These issues have affected the country’s ability to maximise output and ensure a consistent supply of crude oil for domestic use.

The Federal Government’s position underscores the importance of increasing production and addressing supply constraints as Nigeria seeks to strengthen its refining industry.

With higher crude oil output, more barrels could become available to the Dangote Refinery and other domestic operators, potentially improving local refining capacity and reducing reliance on imported petroleum products.

For now, the availability of sufficient crude oil remains a key factor in Nigeria’s ambition to meet domestic fuel demand through local refining while building a stronger petroleum industry.