Why Dangote is buying crude abroad despite Nigeria’s oil wealth – CEO

Africa’s largest refinery is operating with less than half the crude oil it needs from Nigeria’s state energy company, forcing it to source expensive imports on international markets at a time when the Middle East war has driven global crude prices to their highest levels in years and passing a significant share of those costs on to Nigerian consumers.

Dangote Refinery Chief Executive Officer David Bird disclosed that the facility was expected to receive between 13 and 15 cargoes of crude monthly under the naira-for-crude arrangement with NNPC, but is currently receiving only about five, creating a significant supply shortfall. The refinery, which has a nameplate capacity of 650,000 barrels per day, can “easily” take 13 or more cargoes, Bird said at a briefing in Lagos.

The financial scale of the shortfall is staggering. Data from a senior management source within the refinery indicates that the facility experienced a crude oil supply shortfall of approximately 79.53 million barrels between October 2025 and mid-March 2026. Using average market prices for Bonny Light crude, the 79.53 million barrels not supplied to the refinery represented an estimated $5.40 billion in crude value that Dangote could not access over the period.

To bridge the gap, the refinery has been forced onto the international spot market at a premium. Nigerian crude is more expensive than the Brent benchmark by $3 to $6 per barrel. After adding freight of $3.50 per barrel, crude lands in the refinery’s tanks at between $88 and $91 per barrel, compared to a landing cost of $68 per barrel when the refinery’s ex-depot price for Premium Motor Spirit stood at N774 per litre. Foreign traders charge an additional premium on internationally sourced crude, and with Brent hovering around $115 per barrel on the back of the ongoing Middle East conflict, the cost of every barrel imported adds directly to Nigeria’s fuel price burden.

Bird explained that approximately 30 per cent of the refinery’s crude supply currently comes through the naira-for-crude programme, another 30 per cent from Nigerian crudes purchased on the spot market, and the remaining 40 per cent from international grades. Despite the mix, he called for an expansion of the naira-for-crude policy. “Definitely, we would always like to enhance the crude-for-naira programme. Even at that level, five cargoes a month, for example, it has contributed to the stabilisation of the naira enormously,” he said.

Bird was also at pains to clarify a frequently misunderstood aspect of the policy. “Crude for naira is not there to benefit Dangote Refinery. That is a fundamental misunderstanding. The programme is to provide resilience to foreign exchange,” he said, stressing that the refinery continues to purchase crude at full international benchmark prices.

The cost pressure is already being felt at the pump. Dangote said it has voluntarily absorbed 20 per cent of the total cost escalation caused by rising global crude and freight prices, but 80 per cent of that increase has been passed to marketers and ultimately to consumers, contributing to petrol prices of between N1,200 and N1,300 per litre in major cities.

Beyond NNPC’s shortfall, the refinery is also receiving less crude than required from Nigeria’s upstream producers. Nigeria’s upstream producers are falling short of separate crude supply obligations under the Petroleum Industry Act, which explicitly prohibits the export of crude before meeting local demand, yet NNPC has continued to export some of its oil even as the domestic refinery goes short.

Despite the supply constraints, the refinery remains committed to the domestic market. The company pledged to prioritise fuel supply to Nigeria over exports, describing local refining as a strategic buffer against the global supply disruptions caused by the Middle East conflict. It also announced plans to introduce Compressed Natural Gas-powered trucks to lower distribution costs and shorten supply timelines for retail markets across the country.

The refinery reached its initial nameplate capacity of 650,000 barrels per day for the first time in February 2026 and is now targeting 700,000 barrels per day, an ambition that will count for little unless the crude supply shortfall at the heart of Nigeria’s domestic energy paradox is urgently resolved.