Nigeria’s state oil company, NNPC, has initiated talks with Dangote Oil Refinery to extend their existing supply contract for naira-based crude oil.
The original six-month agreement, set to conclude this month, was a response to the challenges faced by local refineries, including Dangote, in securing crude supplies.
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The deal, which began in October, was designed to ease supply constraints by enabling refineries to purchase crude directly from NNPC in the local currency.
So far, NNPC has supplied Dangote Oil Refinery with 48mbbl of oil under the current terms.
While the initial agreement intended to include seven other smaller refineries, only Dangote Oil Refinery has reaped the benefits, and even then, it did not receive the full volume initially agreed upon.
NNPC said “discussions are ongoing towards” forming a new contract, although details regarding volume, pricing and duration remain undisclosed.
Dangote Petroleum Refinery and Petrochemicals, situated in the Lekki Free Zone of Ibeju Lekki Lagos, Nigeria, is recognised as “Africa’s biggest oil refinery and the world’s biggest single-train facility”, according to the company’s website.
The refinery’s pipeline infrastructure spans 1,100km and manages three billion standard cubic feet of gas per day.
Upon completion, the refinery is expected to meet Nigeria’s entire demand for refined products and generate a surplus for export.
The multi-billion-dollar project is set to create a significant market for $21bn (N32.41trn) per annum of Nigerian crude.
In December 2024, Dangote Refinery announced its first petrol exports to Cameroon, a key step in regional energy integration that may help stabilise fuel prices.
