Crude Supply Clash Between NNPC and Dangote Refinery Impacts OPEC Oil Output
A growing standoff between Nigeria’s state oil giant, NNPC Limited, and Dangote Refinery is making waves well beyond Nigeria’s borders—now impacting the overall crude oil production figures of OPEC for March 2025.
According to a Reuters survey, OPEC’s output dipped by 110,000 barrels per day (bpd) in March, dropping to 26.63 million bpd. The decline is largely attributed to Nigeria, where NNPC halted crude deliveries to domestic refineries, including the Dangote Refinery—the continent’s largest.
Supply Cut Causes Ripple Effect
The Reuters report notes that oil output from Nigeria, Iran, and Venezuela each fell by around 50,000 bpd. While Nigeria saw a slight increase in oil exports, the drop in local refinery supply caused a net production decline.
Despite this, Nigeria remains slightly above its OPEC production quota, though the country’s internal dynamics are now drawing international attention.
Dangote Deliveries Delayed Over Payment Terms
Further investigations revealed that seven cargoes of crude—destined for the Dangote Refinery—have been delayed. S&P Global attributed this to unresolved payment terms between NNPC and the Dangote Group. The affected cargoes would have delivered approximately 245,000 bpd or 7.2 million barrels over 30 days in April.
Sources speaking to The PUNCH shared that the disagreement centers around the termination of a naira-for-crude deal, which allowed Dangote to pay for crude in local currency. Additionally, credit lines previously extended to the refinery have reportedly been revoked, requiring Dangote to now present letters of credit for further shipments.
End of the Naira-for-Crude Deal
Introduced in October 2024, the naira-for-crude arrangement was meant to stabilize local fuel prices. However, by the time the deal expired in March 2025, only 280,000 bpd had been delivered—far below the 385,000 bpd initially agreed upon.
Once the deal ended, the Dangote Refinery reverted to selling fuel in foreign currency, triggering a spike in pump prices nationwide.
Mounting Challenges for NNPC
The situation unfolds at a time when NNPC is grappling with multiple challenges—from foreign exchange shortages and mounting national debt to new security threats in Rivers State, a key oil-producing region.
Despite government officials expressing optimism about a new deal, a Dangote executive recently stated that there are no expectations for another naira-for-crude agreement anytime soon.
