The Nigerian National Petroleum Company Limited announced on Thursday its plans to supply six million barrels of crude oil to the Dangote Refinery. A recent report by The PUNCH highlighted the delay in the refinery’s take-off due to a shortage of crude oil, with the Federal Government acknowledging the issue as a result of low oil production.
Responding to the report, sources within the NNPCL revealed that the oil company is prepared to deliver the allocated six million barrels of crude oil to the refinery by December. A senior official, speaking on the condition of anonymity, emphasized the significance of this move in enhancing domestic refining and achieving energy security.
The official also confirmed the imminent signing of a sales and purchase agreement between the national oil company and the refinery, scheduled to take place in Abuja. Clarifying recent speculations, sources close to both parties underscored that the deal is purely commercial and does not involve any discount or selling at exceptionally low prices.
As per Section 109 of the Petroleum Industry Act (2021), domestic crude oil supply obligations are mandated for various refineries, including the Dangote Refinery and NNPCL refineries in Port-Harcourt, Warri, Kaduna, and other modular refineries. The section further emphasizes that crude oil supply to the domestic market operates on a willing buyer and willing supplier basis.
Furthermore, the NNPCL has already acquired an equity stake in the Dangote Refinery and is ready to commence crude oil supply to the facility. It was previously reported that the delay in supplying crude oil to domestic refineries, including the Dangote Refinery, has significantly impeded the production of refined petroleum products.
The report noted that the 650,000 barrels per day Dangote refinery missed its October production projection, marking the second time in 2023 that hopes of ending petrol importation in Africa, particularly Nigeria, were deferred. Consequently, Nigeria will continue to depend on fuel imports until the NNPCL initiates crude oil supply to the plant in December.
The report also highlighted the challenge faced by Nigeria’s domestic refineries, as the unavailability of crude oil has hindered their production capabilities. Several modular refineries are reportedly ready to commence the production of refined petroleum products but have been unable to do so due to the scarcity of crude oil. Additionally, the Dangote Refinery in Lekki, Lagos, has yet to receive the required volumes of crude oil necessary for refined product production.