NNPCL May Cut Crude Supply To Dangote
The Federal Government may cut its crude oil supply to the Dangote Petroleum Refinery, reducing it from the current allocation of 300,000 barrels per day, except if there is a surge in Nigeria’s oil output.
This reduction is expected to take place as part of adjustments under the government’s naira-for-crude initiative following the coming onstream of the Warri and Port Harcourt refineries.
Both refineries currently operate at a combined capacity of about 135,000 barrels per day. The plants, managed by the Nigerian National Petroleum Company Limited, commenced operations recently after years of neglect by successive governments, preferring fuel imports.
It was gathered that the planned reduction of crude to the Dangote refinery was also predicated on the necessity to ensure a sufficient supply of crude to all refineries.
This is aimed at boosting competition in the downstream sector, with the government facilitating this through the naira-for-crude initiative. Before the initiative, the government used to allocate about 445,000 barrels per day of crude to domestic refineries operated by NNPCL.
Impeccable sources knowledgeable about the development disclosed the planned slash in crude supply to the Dangote refinery during a chat with our correspondent on Wednesday.
Last year, the Federal Executive Council adopted a proposal by President Bola Tinubu to sell crude to the Dangote refinery and other upcoming refineries in the local currency.
FEC approved that the 450,000 barrels meant for domestic consumption be offered in naira to Nigerian refineries, using the Dangote refinery as a pilot.
Similarly, other refineries with lower capacity were scheduled to receive allocations.
Findings showed that the $20bn Lekki-based plant was allocated about 300,000 barrels per day out of the 450,000bpd approved by the government.
The agreement was designed to last six months in the first instance, pending further review by the Technical Sub-Committee on Domestic Sales of Crude Oil in Local Currency.
However, this agreement will undergo slight adjustments following the commencement of refining operations at the 210,000 PortHarcourt refinery and the 125,000 Warri refinery.
The government had redirected crude allocation of 445,000 barrels formerly disbursed to the Warri, Kaduna, and Port Harcourt refineries following their shutdown to the Dangote refinery.
The official also stated that the government has stopped selling its crude on credit to local refineries for improved revenue collection.
The Dangote refinery may fall back on crude oil import, which is subject to international pricing.
Commenting on the latest development, the Crude Oil Refinery Owners Association of Nigeria stated that the initiative was an intervention designed to address the foreign exchange market volatility and drive down the retail price of petrol, which has been achieved.
The CORAN Publicity Secretary, Eche Idoko, in an interview, however, argued that the coming onstream of the Warri and Port Harcourt refineries is not expected to cut down allocation to local refineries.
