The Nigerian National Petroleum Company (NNPC) Limited is set to allocate six million barrels of crude oil to the Dangote Refinery in December 2023, sources have informed TheCable. This allocation is seen as a crucial step in promoting domestic refining and enhancing energy security within Nigeria.
As part of the process, both the national oil company and the refinery are finalizing plans for the signing of a sales and purchase agreement (SPA). This agreement is expected to be formally executed in the coming weeks.
Insiders with knowledge of the matter have emphasized that this deal is purely commercial in nature and does not involve discounts or the sale of crude oil at significantly reduced prices.
Section 109 of the Petroleum Industry Act (PIA) 2021 outlines the obligation to supply domestic crude oil to refineries, including the Dangote Refinery, as well as NNPC refineries in Port Harcourt, Warri, and Kaduna. It further stipulates that the supply of crude oil to the domestic market should be conducted on a willing buyer and willing supplier basis.
In August 2021, the national oil company acquired a 20 percent minority equity stake in the Dangote Refinery. The refinery, with a capacity of 650,000 barrels per day (bpd), was inaugurated by former President Muhammadu Buhari in May 2023.
Before the refinery’s inauguration, the NNPC had announced plans to supply 300,000 barrels of crude oil to the facility. However, in September, Devakumar Edwin, executive director of the Dangote Group, indicated that the national oil company would not be able to commence crude oil supplies to the refinery until November, which makes the upcoming allocation in December significant for the project’s operations.
