Nigeria Lacks Enough Crude Oil To Meet Dangote Refinery’s Needs, Says FG
The Federal Government has said Nigeria does not currently have enough available crude oil to fully meet the supply needs of the Dangote Refinery and other domestic refineries, citing production-sharing agreements, joint ventures and other deductions from the country’s crude oil output.
The Minister of Finance, Taiwo Oyedele, made this known on Friday during an appearance on Channels Television’s Politics Today, amid calls for the reintroduction of fuel subsidies and proposals for a production subsidy to support local refineries.
Oyedele said that although Nigeria’s crude oil production currently stood at about 1.8 million barrels per day, the entire volume did not belong exclusively to the Federal Government.
He explained that crude oil produced under production-sharing contracts and joint ventures was shared among the parties involved, while other portions were allocated to production costs and royalties before the government’s share of the profit oil was determined.
“So the people that are saying, ‘We’ll discount it, we’ll do the cost of production,’ don’t know what they’re talking about. We don’t have enough to service Dangote. Dangote imports crude. And I just want us to establish that fact,” the minister said.
He added that the deductions and sharing arrangements significantly reduced the volume of crude oil available to the government for domestic supply.
When asked how much crude oil remained available after the deductions, Oyedele said Nigeria could not currently provide up to 700,000 barrels of uncommitted crude oil to any buyer, including the Dangote Refinery.
“I don’t want to go into the technicalities, but the reality is that today we do not have up to 700,000 free crude to give anyone, including Dangote,” he said.
The minister explained that the Federal Government’s naira-for-crude initiative was introduced partly to improve stability in domestic petroleum supply but acknowledged that the available volume remained insufficient.
According to him, increased crude oil production would eventually enable Nigeria to supply the Dangote Refinery and other local refiners with sufficient quantities.
“As we ramp up production and we free up some barrels, we’ll get to a point where we’ll be able to give Dangote everything he wants and other refiners will be able to get enough,” he said.
Oyedele added that his personal hope was for Nigeria to reach a point where all the crude oil it produced would be refined locally, with only refined petroleum products exported.
His comments come amid renewed debate over fuel prices and calls by opposition figures for the government to consider alternative support measures, including production subsidies for domestic refineries.
On Thursday, Oyedele disclosed that the Federal Government had introduced a 30-day petrol discount for products dispensed by the Nigerian National Petroleum Company Limited (NNPCL). The initiative attracted criticism from opposition politicians and other Nigerians, some of whom described it as a possible return of fuel subsidy through another route.
President Bola Tinubu introduced major economic reforms after assuming office in 2023, including the removal of the petrol subsidy and the floating of the naira. While the policies have been defended by the government as necessary to address economic challenges, they have also contributed to rising living costs and hardship for many Nigerians.
Nigeria, Africa’s leading oil producer, is home to the Dangote Refinery, owned by billionaire industrialist Aliko Dangote. Despite the refinery’s operations, domestic petrol prices have remained high, reflecting market conditions and the cost of supplying petroleum products.
Oyedele maintained that increasing crude oil production would be crucial to improving supply to domestic refineries and strengthening Nigeria’s capacity to refine more of its crude oil locally.