NNPC Begins New Negotiations With Dangote Refinery, Clarifies End of Naira for Crude Oil Deal

• The NNPC Limited has clarified the end of the naira for crude agreements with local refineries including the Dangote refinery
• The oil company explained that the agreement was only for six months and that it had begun negotiations for a new one
• The naira-for-crude agreement was introduced to boost domestic refining and reduce dependence on foreign exchange, easing pressure on the naira

Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends.

The Nigerian National Petroleum Company Limited has clarified that it has started discussions with the Dangote Petroleum Refinery for a new contract as its naira for crude oil swap agreement with local refineries is set to end in March 2025.

In a statement released by Olufemi Soneye, its chief corporate communications officer, NNPC limited said the clarification became imperative to address claims that it had stopped the naira for crude oil swap agreement.

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NNPC explained that contrary to reports that it ended the naira crude deal on its own, the deal was structured as a six-month agreement, expiring at the end of March 2025, subject to availability.

The statement reads:

"NNPC Limited has noted recent reports circulating on social media regarding the alleged unilateral termination of the crude oil sales agreement in naira between NNPC Ltd. and Dangote Refinery.

"To clarify, the contract for the sale of crude oil in naira was structured as a six-month agreement, subject to availability, and expires at the end of March 2025. Discussions are currently ongoing towards emplacing a new contract."

NNPC also revealed that since the naira crude initiation in October 2024, the arrangement has facilitated the supply of over 48 million barrels of crude oil to Dangote Refinery alone, Punch reports.

It added:

"Under this arrangement, NNPC Ltd. has made over 48 million barrels of crude oil available to Dangote Refinery since October 2024.

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"In aggregate, NNPC Ltd. has made over 84 million barrels of crude oil available to the Refinery since its commencement of operations in 2023.

"NNPC Limited remains committed to supplying crude oil for local refining based on mutually agreed terms and conditions."

Impact of NNPC's naira for crude oil

The decision to suspend the naira for the crude swap deal has raised concerns about its impact on the naira.

The crude swap deal was aimed at boosting domestic refining capabilities and reducing dependence on foreign exchange, thereby easing pressure on the naira.

Unless a new agreement is reached soon, refineries such as Dangote, Waltersmith Petroman, and others will have to source dollars to buy crude oil.

Azikiel refinery concludes plans to roll out petrol

Earlier, Legit.ng reported that the president of Azikel Group, operators of the Azikel Modular Refinery in Bayelsa, Azibapu Erunani, disclosed that the facility was unique as it was the only one in Sub-Saharan Africa to refine condensate in addition to petrol, diesel, and aviation fuel.

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NNPC breaks silence as its naira-for-crude deal with Dangote refinery, others ends

Erunani stated that the facility was worth over $850 million and had about 400 foreign and local employees.

He also said one of the reasons he founded the refinery was to add value to Nigerian crude oil, create jobs, and industrialise Bayelsa.

Proofreading by James Ojo, copy editor at Legit.ng.

Source: Legit.ng