New refineries: FG To Slash Crude Allocation To Dangote Refinery

• FG plans to cut crude allocation to Dangote Refinery for equity.
• Warri and Port Harcourt refineries boost competition in oil supply.
• Refiners must now pay upfront for crude to ensure revenue.

The Federal Government is considering a reduction in crude oil allocation to the Dangote Petroleum Refinery, currently set at 300,000 barrels per day.

This adjustment, expected under the naira-for-crude initiative, follows the revival of the Warri and Port Harcourt refineries, which have a combined refining capacity of 135,000 barrels per day.

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EKO HOT BLOG reports that the refineries, managed by the Nigerian National Petroleum Company Limited (NNPCL), resumed operations recently after prolonged inactivity.

Sources indicate that the reduction is aimed at ensuring an equitable crude supply to all domestic refineries. The move is also designed to boost competition in the downstream sector. Under the naira-for-crude initiative, the Federal Government previously allocated 445,000 barrels per day for domestic refineries, but this is now being redistributed among the operational plants.

One source revealed that the decision would be revisited by the Technical Sub-Committee on Domestic Sales of Crude Oil in Local Currency.

Currently, the Dangote refinery receives the bulk of the allocation at 300,000 barrels per day, but this figure is expected to drop as other refineries come online.

“The formula for allocation is still under review, but it is almost certain that the 300,000 barrels allocated to the Dangote refinery will be reduced,” the source explained.

The Federal Government is also enforcing stricter financial terms, requiring refineries to pay upfront for crude oil, a policy intended to enhance revenue collection.

Commenting on the development, the Crude Oil Refinery Owners Association of Nigeria (CORAN) emphasized that the naira-for-crude agreement was initially introduced to stabilize the foreign exchange market and lower fuel prices.

CORAN’s Publicity Secretary, Eche Idoko, stated that the current allocation strategy aims to maintain affordable petrol prices, which have declined recently.

However, Idoko stressed the need for increased crude oil production to support both domestic refineries and the broader energy market.

As the Federal Government recalibrates its crude allocation strategy, the Dangote refinery may have to supplement its supply with imports, subject to international market prices.

The policy adjustments reflect ongoing efforts to balance domestic refinery capacity with the need for economic stability and revenue generation.

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