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Nigeria’s Local Currency Crude Oil Plan Hits Roadblocks
Nigeria’s ambitious strategy to price crude oil in naira for local refineries has encountered significant setbacks just two months after its rollout. Spearheaded by the Nigerian National Petroleum Company (NNPC), the plan’s goal was to stabilize the country’s dollar reserves while ensuring sufficient crude supply for domestic refining.
But the initiative appears to be faltering. Major players like Dangote Oil Refinery are receiving only a fraction of what it was promised.
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According to Edwin Devakumar, the Dangote refinery’s executive director, NNPC committed to delivering 385,000 barrels per day (bpd) to the 650,000-bpd facility but has failed to meet even this reduced quota. Describing deliveries as “peanuts,” Devakumar highlighted the challenges of relying on inconsistent domestic supply chains. Meanwhile, other refineries under the Crude Oil Refinery-owners Association of Nigeria (CORAN) report being entirely excluded from the naira-based crude program, citing ongoing negotiations with the government for resolution.
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This supply crunch has forced Dangote to turn to international markets, recently purchasing 2 million barrels of U.S. WTI Midland crude. This may highlight the refinery’s global competitiveness, but it also exposes the inadequacy of Nigeria’s domestic crude allocation system.
NNPC has faced criticism for its inability to tackle a long history of chronic oil theft and pipeline vandalism. It now faces new criticism—for failing to prioritize local refining needs. Efforts to enforce domestic supply rules through the Nigerian Upstream Petroleum Regulatory Commission have so far proven ineffective.
As Nigeria’s largest refinery edges toward its year-end goal of 85% operational capacity, its struggles are emblematic of broader systemic issues in the country’s energy sector. Without reliable crude supply, the vision of a self-sufficient refining industry—anchored by the Dangote refinery—risks being another unrealized ambition in Nigeria’s complex oil landscape.
By Julianne Geiger for Oilprice.com
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Source: https://oilprice.com/
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