The Nigerian Federal Government has reached a formal agreement with Dangote Refinery for the supply of 12 million barrels of crude oil to the refinery in October. Aliko Dangote, the CEO of Dangote Refinery, confirmed this development during an interview with Bloomberg TV while in the United States.
According to Dangote, the crude oil supply is part of a broader agreement aimed at boosting local refining capacity, ensuring that petroleum products like petrol, diesel, and jet fuel are produced domestically. This agreement is a key component of the “Crude Oil for Naira” initiative, a strategic collaboration between the Nigerian government and the Dangote Group.
Dangote emphasized the importance of this agreement, stating, “We are working on a strong partnership with the federal government to guarantee energy security for Nigeria. With this deal in place, we aim to eliminate the long-standing issue of fuel shortages in the country.”
He further explained that the government is committed to delivering 12 million barrels of crude oil to the refinery in October. This volume, which translates to about 390,000 barrels per day, will be processed to meet domestic fuel needs. The refinery is expected to produce petrol, diesel, and aviation fuel primarily for the local market, with any excess being exported to other countries.
Dangote also highlighted the significant impact this agreement will have on the fuel distribution network across Nigeria. He noted that up to 50-60% of petrol stations that have been closed due to supply issues will be brought back into operation. “This deal with the government will allow us to supply refined products to all marketers, ensuring that many of the petrol stations that have been inactive will reopen, thereby increasing access to fuel across the nation,” Dangote said.
In addition to increasing fuel availability, this agreement is expected to result in significant cost savings, particularly by reducing the expenses associated with demurrage, which occurs when ships are delayed in offloading their cargo. Dangote explained, “We are looking at saving over $1 billion in demurrage costs alone, as we will no longer need to have ships anchored offshore waiting to offload crude oil or refined products.”
Overall, this deal between Dangote Refinery and the Nigerian government is expected to not only improve the country’s energy security but also have a positive economic impact by reducing costs and improving fuel availability across the nation.