NNPC raises crude supply to Dangote Refinery, shortfall persists 

By: Amarachi Okonkwo  

The Nigerian National Petroleum Company Limited has increased crude oil allocations to the Dangote Petroleum Refinery and Petrochemicals, raising supply to seven cargoes for May loading in a move aimed at strengthening domestic fuel production amid mounting price pressures. 

According to two trader sources cited by Reuters, the revised allocation represents an uptick from the five cargoes the refinery has been receiving in recent months. However, supply for April remains unchanged at five cargoes, underscoring the persistent gap between demand and available domestic crude. 

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The increase comes at a critical time for Nigeria’s downstream sector, where petrol prices have surged to record levels, driven by supply constraints and high global crude costs. Despite ramping up operations since commencing production in 2024, the 650,000-barrels-per-day Dangote refinery continues to face challenges securing sufficient crude feedstock locally. 

Industry data indicates the facility requires between 13 and 15 cargoes monthly to operate at optimal capacity more than double the volumes currently supplied by domestic sources. This shortfall has forced the refinery to rely heavily on imported crude, exposing it to volatile international pricing influenced by geopolitical tensions, particularly ongoing conflicts in the Middle East. 

Neither NNPC nor Dangote refinery officials responded to requests for comment as of press time. However, multiple industry sources had earlier disclosed that the national oil company is increasingly leveraging its global trading network to bridge supply gaps. 

“Leveraging our global crude trading network, we are sourcing third-party crude for the refinery at prices competitive with prevailing international market rates,” a senior NNPC official said, speaking on condition of anonymity. 

The official added that NNPC remains committed to supporting domestic refining within the framework of existing agreements, despite what it described as “temporary availability constraints.” 

Even with these efforts, supply limitations continue to weigh on the refinery’s ability to fully stabilise Nigeria’s fuel market. Current output is estimated to meet just over two-thirds of the country’s daily petrol demand of about 60 million litres. 

Rising input costs have already filtered through to the market. The refinery recently increased its petrol depot prices by approximately 13 per cent, intensifying pressure across the downstream value chain. 

Analysts say the incremental increase in crude allocation, while positive, is insufficient to resolve structural supply challenges. They note that consistent and adequate domestic crude supply will be critical for the refinery to achieve scale efficiencies, lower production costs, and exert meaningful downward pressure on pump prices. 

The development also carries implications for Nigeria’s crude export profile. Diverting additional barrels to domestic refining could reduce export volumes at a time when global supply remains tight, potentially pushing international buyers to alternative markets and affecting Nigeria’s competitiveness. 

For policymakers, the balancing act between maximising export revenues and ensuring domestic energy security is becoming increasingly complex. While boosting local refining capacity is central to reducing import dependence and easing foreign exchange pressures, sustained crude supply at required volumes remains the linchpin. 

Until then, industry watchers warn, Nigeria’s ambitions for fuel price stability and energy self-sufficiency will continue to hinge on resolving upstream supply constraints and aligning pricing mechanisms to support domestic refiners.