Reasons why NNPC, Dangote refinery are negotiating new naira-for-crude deal

The Nigerian National Petroleum Company (NNPC) Limited says negotiation is ongoing for a new naira-for-crude deal with Dangote Petroleum Refinery.

NNPC announced in a statement on Monday after TheCable reported earlier that the government-owned oil company had reportedly suspended the naira-for-crude deal until 2030, as it has forward-sold all its crude oil.

The discontinuation will force refiners to rely on international suppliers for crude oil, gulping huge costs in dollars and triggering an uptick in the pump price of petrol.

However, Olufemi Soneye, the chief corporate communications officer of NNPC, said the current deal will expire at the end of March.

“NNPC Limited has noted recent reports circulating on social media regarding the alleged unilateral termination of the crude oil sales agreement in Naira between NNPC and Dangote Refinery,” Soneye said.

“To clarify, the contract for the sale of crude oil in Naira was structured as a six-month agreement, subject to availability, and expires at the end of March 2025. Discussions are currently ongoing towards emplacing a new contract.”

Under the current arrangement, Soneye said NNPC has made over 48 million barrels of crude oil available to Dangote refinery since October 2024.

“In aggregate, NNPC has made over 84 million barrels of crude oil available to the Refinery since its commencement of operations in 2023,” he said.

“NNPC Limited remains committed to supplying crude oil for local refining based on mutually agreed terms and conditions.”

The sale of crude oil and refined petroleum products in naira to local refineries commenced on October 1, 2024, to improve supply, save the country millions of dollars in petroleum products imports, and ultimately reduce pump prices.