Dangote Refinery Faces Crude Supply Cut As New Refineries Emerge

Dangote Refinery Faces Crude Supply Cut As New Refineries Emerge

The Federal Government is considering cutting crude oil supply to the Dangote Petroleum Refinery, currently allocated 300,000 barrels per day, unless there’s a significant boost in Nigeria’s oil production, ireporteronline has….Dangote Refinery Faces Crude Supply Cut As New Refineries Emerge

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This decision comes as the Warri and Port Harcourt refineries return to operation with a combined capacity of 135,000 barrels per day after years of inactivity. The move is part of the government’s naira-for-crude initiative, aiming to enhance competition in the downstream sector and stabilize the local oil market.

Crude Supply Dynamics

The Dangote refinery, a $20 billion state-of-the-art facility in Lekki, has been a key player under the naira-for-crude pilot program. However, with more refineries coming online, including Warri, Port Harcourt, and the upcoming BUA refinery, crude allocation is set to be redistributed to ensure fair competition.

“Crude allocation will be adjusted to balance supply across all refineries,” a reliable source told ireporteronline . “The only sustainable solution is ramping up production.”

Challenges Ahead

The government’s shift to pre-payment for crude instead of credit sales has also put pressure on local refineries, including Dangote, which might resort to importing crude at international prices.

Meanwhile, the Nigerian Upstream Petroleum Regulatory Commission has projected a daily crude oil requirement of 770,500 barrels for nine operational refineries, including Dangote. This accounts for 37% of the nation’s estimated daily production of 2 million barrels by mid-2025.

Future Outlook

Efforts are underway to boost production through initiatives like Project 1 Million Barrels, aiming for a daily output of 2.5 million barrels. Experts believe this will ensure sustained crude supply to local refineries while stabilizing the downstream sector.

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