Home West Africa NNPC Negotiates Naira-Based Crude Supply Agreement with Dangote Refinery

West Africa

NNPC Negotiates Naira-Based Crude Supply Agreement with Dangote Refinery

March 16, 2025

(3 Minutes Read)

The Nigerian National Petroleum Company Limited (NNPC) has announced that it is actively negotiating a new crude oil supply contract with the Dangote Refinery, which will be priced in naira.

The Nigerian National Petroleum Company Limited (NNPC) has announced that it is actively negotiating a new crude oil supply contract with the Dangote Refinery, which will be priced in naira. This comes as the existing six-month agreement approaches its end in March 2025. The statement, issued on Monday, addresses ongoing speculation about the current deal, clarifying that it has not been terminated and that discussions for a new contract under similar conditions are underway. NNPC Limited is dedicated to providing crude oil for local refining based on mutually agreed terms.

This agreement is crucial for Nigeria’s efforts to lessen its reliance on imported fuels and enhance the local energy sector. The naira-for-crude model, where crude oil is exchanged for payment in the local currency, is seen as a practical way to support local currency liquidity and strengthen domestic refining capabilities.

Since October 2024, the NNPC has delivered over 48 million barrels of crude to the Dangote Refinery, which processes 650,000 barrels per day and began operations in 2023. This brings the total to over 84 million barrels since the refinery’s launch, according to NNPC data.

Located in the Lekki Free Trade Zone near Lagos, the Dangote Refinery is the largest oil refinery in Africa and plays a vital role in Nigeria’s energy infrastructure. Developed by the Dangote Group, it aims to significantly reduce the country’s dependence on imported refined petroleum products and ensure stable domestic fuel supplies.

Industry analysts view the renegotiation of the naira-based supply deal as a key indicator of broader energy sector reforms in Nigeria, particularly those focused on currency localisation, economic resilience, and enhancing local refining capabilities. With the current deal nearing expiration, both parties are expected to finalise new terms that reflect the changing economic landscape and support Nigeria’s national energy strategy.