Aliko Dangote's Refinery, Others Under Pressure As Nnpc Ends Naira-for-crude Deal
- Nigerias NNPC has scrapped the naira-for-crude swap, forcing refiners like Dangotes to source crude internationally and pay in U.S. dollars.
- The policy shift raises operational costs for local refiners, potentially driving up fuel prices amid Nigerias ongoing foreign exchange challenges.
- The refinery is ramping up storage capacity and crude imports while expanding fuel exports to Africa and beyond, including a recent deal with Saudi Aramco.
The Dangote Petroleum Refinery, Africas largest refinery owned by billionaire Aliko Dangote, is facing a new setback. Nigerias state-owned oil company, the Nigerian National Petroleum Company NNPC Limited, has abruptly scrapped the naira-for-crude oil swap deal.
This decision forces local refinersincluding Dangotes facilityto source crude oil from international suppliers and pay in dollars instead of naira. The move is expected to drive up operational costs and could lead to higher fuel prices.
The naira-for-crude deal was introduced on October 1, 2024 , to support domestic refining, ease pressure on Nigerias foreign exchange reserves, and reduce reliance on imported fuel. With its sudden suspension, local refiners must now turn to international suppliersoften at higher pricesmaking fuel production more expensive.
Dangotes Refinery powers Nigerias energy shiftSince launching operations last year, Dangotes refinery has reshaped Nigerias fuel market. Spanning 6,200 acres in the Lekki Free Zone, the 20 billion facility has reduced the countrys dependence on imported petroleum products, forcing European refiners to look for new buyers.
By mid-2024, the refinery was processing 350,000 barrels per day b/d, with output increasing to 500,000 b/d by January 2025. Full capacity of 650,000 b/d is expected within months, making it one of the largest refineries in the world.