Dangote refinery’s new fuel distribution scheme targets inflation, Job creation

Despite its status as Africa’s largest oil producer, Nigeria imported crude oil worth N1.19 trillion in the first quarter of 2025. This significant import volume is largely attributed to inadequate domestic supply to local refineries, as revealed by data from the National Bureau of Statistics (NBS).

In its Q1 2025 Foreign Trade in Goods Statistics report, the NBS classified crude oil as “Petroleum oils and oils obtained from bituminous minerals, crude,” making it Nigeria’s third most imported product. It accounted for 7.7% of total imports, trailing only gas oil (N1.83 trillion) and motor spirit (N1.76 trillion).

The data further showed that the United States was Nigeria’s leading crude oil supplier, exporting N726.84 billion worth of crude to Nigerian refineries, representing about 61% of total crude imports. Angola and Algeria followed with N223.58 billion and N122.37 billion, respectively.

This heavy reliance on imported crude reflects ongoing challenges in aligning Nigeria’s domestic crude production with the needs of local refineries, including the Dangote Refinery and various modular refineries. Many of these facilities have been compelled to source crude internationally due to erratic domestic supply.

The Crude Oil Refinery-owners Association of Nigeria (CORAN) confirmed that most domestic refiners had received zero crude allocations in recent months under the Domestic Crude Supply Obligation (DCSO), a core component of the Petroleum Industry Act (PIA) 2021.

CORAN’s Publicity Secretary, Eche Idoko, decried the situation, stating, “Local refiners, especially modular refineries, have not been getting crude—zero allocation under DCSO or any special arrangement.” He explained that many operators have resorted to private imports, which are costly and ultimately unsustainable.

Despite Nigeria producing over 1.4 million barrels of crude per day, approximately 500,000 barrels per day earmarked for local refining are reportedly still being diverted to international markets, allegedly by oil companies seeking quicker returns through foreign exchange.

To address this critical situation, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has banned the export of crude meant for local refineries, warning producers that such diversions are illegal.

NUPRC Chief Executive, Gbenga Komolafe, affirmed that the commission will no longer issue export permits for cargoes designated for domestic refining, emphasizing that this move is in accordance with Section 109 of the PIA.

Industry stakeholders have welcomed the directive, though they stressed the vital need for strict enforcement. “We hope the IOCs will be cooperative,” Idoko said, highlighting that many modular refineries are currently operating significantly below capacity due to the persistent crude shortage.

According to the NUPRC, eight domestic refineries, including the Dangote Refinery, require 770,500 barrels of crude per day for operations between January and June 2025. These include:

• Dangote Refinery – 500,000 bpd
• Port Harcourt Refinery – 60,000 bpd
• Warri Refinery – 125,000 bpd
• Kaduna Refinery – 110,000 bpd
• OPAC Refinery (Delta) – 10,000 bpd
• WalterSmith Refinery (Imo) – 5,000 bpd
• Duport Midstream (Edo) – 2,500 bpd
• Edo Refinery – 1,500 bpd
• Aradel Refinery (Rivers) – 11,000 bpd

The Commission noted that this allocation represents 37% of Nigeria’s projected average daily production of 2.07 million barrels in H1 2025 and that its “Project One Million Barrels” initiative has already boosted domestic production capacity.

Crude oil, gas oil, and petrol imports collectively stood at over N4.78 trillion in Q1 2025, accounting for more than 30% of Nigeria’s total imports (N15.43 trillion). Mineral fuels topped all import categories, totaling N4.97 trillion, or 32.23% of total imports.

Meanwhile, crude oil exports still accounted for 62.89% of Nigeria’s total export value in the same period, with oil exports valued at N12.96 trillion—despite a 16.35% year-on-year drop.

Top crude buyers included India, the Netherlands, the U.S., France, and Spain.

Refinery owners have urged the Federal Government and President Bola Tinubu to prioritize local refineries in its economic reform agenda. “We are appealing to the President and his team to focus on domestic producers, particularly modular refineries, who are contributing to the economy and strengthening the naira,” Idoko stated.

The call comes amid rising concerns that petroleum product imports continue to drain Nigeria’s foreign exchange reserves and limit the effectiveness of the country’s energy independence strategy.

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As regulatory efforts intensify, stakeholders hope that better enforcement of domestic crude supply policies will finally enable local refineries to meet national demand and significantly reduce Nigeria’s reliance on imported fuels.

Dangote Refinery’s New Fuel Distribution Scheme Targets Inflation, Job Creation

In a related development, the Dangote Petroleum Refinery has announced a bold fuel distribution initiative aimed at tackling Nigeria’s high inflation, creating thousands of jobs, and improving nationwide access to refined petroleum products.

In a statement issued Tuesday, the refinery revealed plans to deploy 4,000 Compressed Natural Gas (CNG)-powered tankers to distribute Premium Motor Spirit (PMS), diesel, and other products across the country. The new logistics model includes free transportation support to large-scale consumers such as marketers, petrol station operators, manufacturers, telecom companies, and the aviation sector.

The Dangote Group said the logistics overhaul is designed to reduce distribution costs, which currently contribute between 10% and 30% of fuel prices, according to energy analyst Ibukun Phillips.

Eliminating these costs is expected to lower pump prices, particularly in rural areas where fuel is often more expensive despite lower income levels.

“The initiative could help revive idle filling stations and ensure equitable distribution,” Phillips stated, also noting that at least 8,000 drivers will be employed in the initial phase.