By Milcah Tanimu

The Dangote Refinery, with a capacity of 650,000 barrels per day, is set to reduce its reliance on crude oil imports from the United States and significantly increase its procurement from local Nigerian producers. According to a Bloomberg report, the refinery plans to source over 80% of its crude oil from Nigerian suppliers in the third quarter of 2024, up from less than 75% in the previous quarter.

This shift comes following the federal government’s recent approval for selling crude oil to the refinery in Naira. This decision aims to alleviate pressure on foreign exchange reserves and streamline transactions for both the refinery and the government.

Aliko Dangote, CEO of the refinery, has previously expressed frustration over difficulties in sourcing crude from the Nigerian National Petroleum Corporation (NNPC) and other international oil companies (IOCs) operating in Nigeria. As a result, the refinery has had to rely on imports from the United States and Brazil.

The refinery had imported one-third of its feedstock from the U.S. at times, but is now scaling back these imports. It has arranged to receive six shipments of crude oil from NNPC for the upcoming month, each containing approximately one million barrels. Additionally, two shipments from Nigeria and two million barrels of WTI Midland crude are anticipated in September.

The new policy to sell crude in Naira, starting October 1, 2024, aligns with President Tinubu’s proposal to prevent NNPC from selling crude to local refineries in foreign currency. This move is expected to help stabilize the pump price of refined fuel and improve the dollar-naira exchange rate.

The Dangote Refinery, located in Lagos, has long criticized Nigeria’s oil regulatory bodies for failing to enforce the Petroleum Industry Act (PIA), which mandates the provision of crude to local refineries. The federal government’s recent decision is seen as a step towards addressing these concerns and ensuring a steady supply of crude oil to the refinery.