Nigeria’s state oil company has signed a fresh two-year crude supply agreement with the Dangote Petroleum Refinery, renewing a controversial deal to sell much of the country’s oil to the facility in naira.
The agreement, sealed in August, ensures steady feedstock for the 650,000-barrel-per-day refinery in Lagos, which has struggled with shortages and at one point halted sales of petrol in local currency. Officials said about 82m barrels of crude have been allocated to the plant from October 2024 to date, with 60% of those supplies—roughly 49.3m barrels—sold in naira.
The Nigerian National Petroleum Company Limited (NNPC) confirmed the deal on Monday, saying it would run until 2027 under the government’s “crude-for-naira” initiative. “NNPC Limited has continued to allocate crude to Dangote refinery in naira for the sale of products in the domestic market,” its spokesperson, Andy Odeh, said.
The refinery, owned by Africa’s richest man Aliko Dangote, briefly suspended naira sales earlier this month, citing the exhaustion of its local-currency allocation, before reversing the decision following government intervention. The episode prompted fresh questions about the sustainability of the initiative.
A steering committee chaired by finance minister Wale Edun insisted at the weekend that the naira-for-crude programme would continue. Representatives from the central bank, Afreximbank, the Federal Inland Revenue Service, and oil regulators were present at the meeting, which sought to calm fears of supply disruption.
President Bola Tinubu ordered the arrangement last year as part of efforts to stabilise the domestic fuel market and cut the refinery’s reliance on imported crude, mostly from the US. Oil marketers welcomed the new deal, saying it would help secure fuel supplies and reduce pressure on foreign reserves.
“It is a good development. It will bring stability,” said Hammed Fashola, vice-president of the Independent Petroleum Marketers Association of Nigeria. Others, however, urged the government not to sideline smaller modular refineries, which remain dependent on imported feedstock.
Despite the assurances, analysts warn the arrangement exposes Nigeria to risks if crude allocations fall short or if the government struggles to sustain local-currency payments in the face of a weakening naira. For now, though, the Dangote refinery—seen by officials as central to Nigeria’s energy security—appears to have secured its crude lifeline.
