Vessels Carrying Nigerian Oil Cargoes Stranded at Sea with Unsold Products as Pipeline Explosions
- About 12 consignments loaded with Nigeria’s crude oil since March 10 have remained unsold as buyers are still being sought
- The development presents a steep challenge for Nigeria’s oil industry as buyers now prefer cheaper alternatives from Kazakhstan and other places
- The situation presents a challenge for the economy and may lead to a drop in the prices of April cargoes, which has already been loaded
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Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
Nigeria’s oil sector faces a strong challenge as 12 March-loading crude cargoes remain stranded at sea and unsold, showing the weak demand for the country’s exports.
According to traders, as of March 10, 2025, buyers for the consignments were still being sought.
Source: Getty Images
Nigerian crude oil faces competition
The slow sales come as Nigerian crude faces strong competition from Kazakh-origin light sour CPC Blend, US Western Texas Intermediate (WTI) and the Mediterranean sweet crudes in Europe.
Reports say the glut of comparatively priced alternatives has caused a drop in the value of the April loading of Nigerian cargoes, increasing the country’s challenges.
The development follows the renegotiation of an extension of a six-month crude supply deal between the Nigerian National Petroleum Company Limited and the Dangote Refinery.
Under the current arrangement, NNPC has supplied the refinery with almost 300,000 barrels of crude daily in naira since October 2024 as part of a programme to stabilise the naira and reduce inflation.
The mega refinery began operations in 2023 and has relied on NNPC for its crude oil needs, with over 84 million barrels supplied.
NNPC and Dangote are renegotiating oil deals
Data shows that locally sourced oil accounted for over 80% of Dangote’s crude deliveries between January 2024 and February 2025.
The naira-for-crude deal has been responsible for reducing petrol prices, curbing inflation and the naira stability.
Experts say the deal’s future is uncertain as crude oil prices are set in dollars, with Dangote paying the naira equivalent at a discounted rate.
Angus reported that NNPC’s ability to continue sales discount is hampered by its obligations to fund other crude oil deals.
Also, the state oil company may have limited volumes for sale to domestic refiners, as NNPC reportedly have other supply deals extending to 2030.
Dangote was initially entitled to pay in naira for the first 10 consignments loaded monthly, with traditional cargoes priced in USD.
However, NNPC reportedly now offers more cargo strictly in dollars, while others allow naira payments.
Further changes to the agreements of an extended programme could cause Dangote to raise its dependence on foreign crude imports.
Dangote Refinery imports crude from Equatorial Guinea
According to sources, Dangote plans to source half of its crude needs from import markets and is currently constructing eight storage tanks for the move.
Legit.ng previously reported that the 650,000 bpd-capacity refinery recently bought crude oil from Equatorial Guinea.
This marks another step in its efforts to diversify crude supply sources as it struggles to get enough from local sources.
NNPC may have no choice but to continue supplying domestic refiners under the right of first refusal contained in the Petroleum Industry Act (PIA).
The Domestic Crude Crude Supply Obligation (DCSO) initiative operated by the Nigeria Upstream Petroleum Regulatory Commission (NUPRC) mandates monthly meetings between local refiners and operators to review production and loading programmes.
Pipeline explosion threatens Nigeria’s oil production
Nigeria’s crude oil production was on the upswing, with the country reportedly exceeding its OPEC quota by 70,000 barrels in January.
Source: Getty Images
However, the country’s oil production hit the rocks on Tuesday, March 18, 2025, when the Trans-Niger Pipeline, Nigeria’s largest oil pipeline, exploded.
Reports say the explosion may have been behind President Bola Tinubu declaring a state of emergency in Rivers State the same day.
Mixed fortunes for Nigeria as oil prices fall
Legit.ng earlier reported that Nigeria’s Bonny Light crude dropped by 10.6% to $73.53 per barrel from $84.02 in January, sending fears over the performance of the Nigerian government’s 2025 budget and revenue target.
The 2025 budget benchmarked oil prices at $75 per barrel, oil production at 2.06 million barrels per day, and a revenue projection of N36.35 trillion, of which 56% was projected to come from oil sales.
Experts say the decline in oil prices represents a 6.6% potential dip in Nigeria’s oil revenue target, worsened by declining oil output below 2.06mbpd.
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Source: Legit.ng
