Naira-for-crude Deal May Resume as Dangote, FG Set for Talks

• There are indications that the federal government's naira-for-crude strategy might resume
• Insiders familiar with the issue believe that the parties to the agreement will reunite soon
• The latest move comes weeks after the Dangote refinery ceased selling refined petroleum products in naira

Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.

There are indications that the federal government's naira-for-crude policy may continue, as insider sources familiar with the matter insisted on Monday, March 31, 2025, that all parties involved in the agreement would reconvene soon.

The first part of the six-month arrangement between the federal government, Nigerian National Petroleum Company Limited, and Dangote Petroleum Refinery ended on March 31, 2025.

Since the naira-for-crude agreement has not been extended, Dangote refinery has ceased selling refined petroleum products in naira.

Dangote imports 12.6 million barrels of crude

According to a report released by S&P Global on Monday, the Dangote refinery has processed over 400,000 barrels of crude oil per day in 2025 thus far, with about 35% of the supply coming from imports.

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This indicates that the plant imported 12.6 million barrels of crude oil during three months, or roughly 140,000 barrels every day.

A senior government official familiar with the operations of the committee overseeing the contract said the administration has not ruled out the naira-for-crude strategy.

“The initiative is going to continue because it is now obvious that the policy has a great impact on not just fuel prices, but also on other economic indices. It also positively impacted the FX rate.

“However, the committee is awaiting the Nigeria Upstream Petroleum Regulatory Commission’s submission on the task given to it as regards the policy. Once that is done, the next thing should be the way forward as regards the naira-for-crude policy,” the source, who spoke to one of our correspondents in confidence due to the lack of authorisation to speak on the matter, stated.

In order to increase supplies, save the nation millions of dollars on petroleum product imports, and eventually lower fuel pump costs, the government started selling crude oil to the Dangote refinery in naira on October 1, 2024.

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According to NNPC, 48 million barrels of crude oil were delivered to the Dangote refinery in naira as part of the agreement. Additionally, it stated that since it started operating in 2023, the refinery has received 84 million barrels of crude.

In a statement, Olufemi Soneye, the Chief Corporate Communications Officer of NNPC, clarified that the original agreement was for six months and that negotiations were now underway to extend it to create a new contract.

According to a corporate executive, the S&P study also disclosed that the Dangote refinery had obtained its first crude oil from Equatorial Guinea and Brazil, as the company's need to diversify its feedstock was prompted by the unstable domestic supply.

The first shipment of Brazil's Tupi crude was delivered to the refinery on March 26 by Petrobras, carrying one million barrels of the medium sweet grade, according to data from S&P Global Commodities at Sea.

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According to the ship tracking data, supplies from Equatorial Guinea have not yet been shipped, but they will soon be added to the expanding list of crude grades that the factory is processing.

“We have started sourcing globally,” a refinery executive told S&P Global Commodity Insights. The official also confirmed that the company now counts Brazil and Equatorial Guinea among its global oil suppliers.

“Dangote has received roughly 400,000 b/d of crude oil in 2025 to date, of which around 35 per cent was imported internationally,” the S&P report stated, quoting data obtained from the CAS data.

According to CAS data, the national oil firm lowered its ownership of the project from 20% to 7.2% in July after providing around one-third of the approximately 300,000 barrels per day of discounted oil it had originally committed to the refinery.

As part of an effort to lower the price of Nigerian fuel, it consented to start providing Dangote with oil in naira in October and momentarily took over as its only supplier.

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However, by March 10, the NOC had delivered about 280,000 barrels of crude per day in naira to Dangote, which was less than the 385,000 barrels per day that was agreed upon in the agreement, according to NNPC records. Officially, the six-month agreement expired on Monday, March 31, 2024.

FG's plans to reopen deal

In response, a Dangote executive who spoke to S&P Global said that there was a great deal of uncertainty about the future of a new naira-for-crude deal, saying, "We are not even certain if it will be renewed or if it will proceed at all."

In addition to the difficulties facing NNPC, he claimed that Dangote's obligation to sell its oil products in naira under the deal had become a hindrance to its operations, leaving the refinery vulnerable to price swings by tying contract prices to dollar-based benchmarks and converting them into naira at the point of sale.

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The source said:

“It’s not commercially advantageous for us when we buy in naira and sell in naira, the forex risk between the time of buying crude and selling the products may not be fully covered”.

NNPC has assigned seven crude oil cargoes to transport around 245,000 barrels per day to the Dangote facility in April, but payment arrangements have not yet been agreed upon, according to trade sources and Nigerian port authorities.

Depot owners criticise naira-for-crude

Legit.ng earlier reported that Olufemi Adewole, the Executive Secretary of the Depot and Petroleum Products Marketers Association of Nigeria, criticised the Federal Government's naira-based sale of crude oil to the Dangote Petroleum Refinery.

Adewole asserted that there are serious dangers associated with the naira-for-crude oil transaction structure, which might have an impact on Nigeria's foreign exchange stability and discourage foreign direct investment.

In a statement on Monday, Adewole expressed concerns about the volatility of the naira and emphasized that crude oil transactions were traditionally conducted in US dollars due to its stability and international acceptability.

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

Source: Legit.ng