The Dangote Petroleum Refinery and several modular refineries in Nigeria are projected to spend approximately $8.56 billion over six months to import an estimated 122.4 million barrels of crude oil to reach full operational capacity. This translates to about $1.43 billion per month in crude importation costs.

This development comes amid lingering uncertainties over the sustainability of the naira-for-crude policy between the Nigerian National Petroleum Company Limited (NNPCL) and the Dangote refinery, coupled with concerns about the Federal Government’s Domestic Crude Supply Obligation. The situation is further complicated by a postponed meeting between the Technical Sub-Committee on the Naira-for-Crude Policy, Dangote Refinery, and government officials, which was initially scheduled for Monday but did not hold as planned.

According to  Punch, insiders indicate that the meeting was rescheduled and is expected to take place before the upcoming Sallah holiday.

The Dangote Refinery, with a processing capacity of 650,000 barrels per day, has been importing crude and is expected to continue doing so due to uncertainty surrounding the naira-for-crude deal. Additionally, the Edo Refinery, which has a capacity of 30,000 barrels per day, is actively exploring crude importation from the United States. Together, these refineries require approximately 680,000 barrels per day, translating to 20.4 million barrels per month and 122.4 million barrels in six months. At an estimated crude price of $70 per barrel, their combined import costs could total $8.56 billion within that period.

Meanwhile, other modular refineries, including Walter Smith, Aradel, Omsa Pillar Astex and Duport Modular Refinery, are making alternative plans to secure crude supplies. The Clairgold and Azikel refineries are also in the advanced stages of construction. However, sources reveal that challenges persist due to NNPCL’s crude allocation commitments to foreign creditors to service loans, making it difficult to sustain the naira-for-crude arrangement with Dangote Refinery.

Reports from the Nigeria Extractive Industries Transparency Initiative and NNPCL’s 2023 financial statements indicate that the company has pledged 8.17 million barrels of crude per month for various loan settlements, alongside an additional $9.5 billion forward oil sales deal.

As a result of the stalled negotiations, the Dangote Petroleum Refinery has temporarily halted the sale of petroleum products in naira, citing an imbalance between its naira-denominated sales and its crude purchase obligations, which are priced in US dollars. The company explained that its local sales proceeds had exceeded the value of naira-priced crude it had received so far, prompting the decision to align its sales currency with its procurement obligations.