The Nigerian National Petroleum Limited has signed a two-year crude supply deal with Dangote Refinery, guaranteeing steady deliveries of crude oil to the 650,000-barrel-per-day refinery in Lekki, Lagos. The agreement, which was signed in August, is part of the federal government’s Crude for Naira initiative, aimed at promoting the use of the local currency for domestic transactions.
Under the deal, NNPC Limited will allocate crude oil to Dangote Refinery in naira, which will then be used to produce petroleum products for the domestic market. The volume and cost of the products supplied will be periodically reconciled by NNPC Limited, Dangote Petroleum Refinery and Petrochemical, and the Nigerian Midstream and Downstream Petroleum Regulatory Authority.
In August, NNPC Limited allocated three crude cargoes to the refinery, with an additional five cargoes allocated for September and October. This development follows the intervention of the Naira for Crude Technical Committee chairman, which led to the lifting of a suspension on petrol sales in naira by Dangote Refinery.
However, the deal comes at a time of tension between Dangote Refinery and the Petroleum and Natural Gas Senior Staff Association, which has directed its members to cut gas and crude supply to the refinery due to the alleged mass sacking of Nigerian workers. Despite federal government intervention, a meeting between the parties ended in deadlock on Monday, highlighting the ongoing challenges facing the Nigerian oil and gas industry.
The signing of the crude supply deal between NNPC Limited and Dangote Refinery is significant, as it demonstrates the commitment of the federal government to promoting the use of the naira for domestic transactions. The deal is also expected to have a positive impact on the operations of Dangote Refinery, which is one of the largest refineries in Africa. As the situation between Dangote Refinery and PENGASSAN continues to unfold, it remains to be seen how the parties will resolve their differences and move forward.
