The Federal Government and Dangote Refinery have reached a landmark agreement to settle payments for crude oil supplied to the refinery in local currency, Naira. This arrangement will see the 650,000 barrels per day (bpd) refinery receive a substantial 24 million barrels of crude oil over the months of October and November 2024.
According to reports from Bloomberg on Monday, the refinery, located outside Lagos, is set to process up to 400,000 barrels of crude per day during this period, marking a key shift for Africa’s largest oil plant in regional import and export markets.
This follows an earlier announcement by the Presidential Committee on the Sale of Crude Oil and Refined Products that NNPC Limited would begin supplying approximately 385,000 barrels of crude oil per day to the Dangote Refinery starting from October 1, 2024. The payments for these supplies will be made in Naira, significantly reducing pressure on Nigeria’s foreign exchange reserves.
In return, the Dangote Refinery will provide premium motor spirit (PMS) and diesel of equivalent value to the domestic market, also payable in Naira. While diesel will be available for sale in the local currency to any interested buyers, PMS will be supplied exclusively to NNPC, which will handle distribution to marketers across the country. All regulatory costs related to the transactions will also be settled in Naira, reinforcing the local currency’s role in domestic energy trade.