Dangote Refinery $4.43bn Crude Import Signals Failure Of Naira-Crude Initiative – Expert

The sustained import of about 39.9 million barrels of crude at a combined cost of approximately $4.43 billion in May and June by Dangote refinery is an indication of Nigeria’s crude-for-naira policy failure.

Oil and gas expert and public affairs analyst, Victor Udoh, while speaking to the policy uncertainties argued that the Dangote Petroleum Refinery would not have spent nearly $5 billion importing crude oil within two months if the initiative was working as intended.

He stated these while speaking in an interview with ARISE NEWS on Thursday.

Udoh said the refinery imported about 39.9 million barrels of crude at a combined cost of approximately $4.43 billion in May and June, insisting the figures demonstrated that the policy had failed to guarantee adequate domestic crude supply for local refining.

“The crude for Naira has not worked. I’m going to speak with facts this morning. Empirical facts, Dangote Refinery saying that they imported about 21 million barrels at the cost of $2.6 billion in May alone. 

There’s another one here that says they imported about 18.9 million barrels at the cost of $1.830 billion in June alone. That’s close to $5 billion they spent on bringing crude in, in the month of May and June. So it shows you, if the crude for Naira is working, they will not spend about $5 billion in two months to bring in crude.”

He said the continued importation of crude by the Dangote refinery raised serious questions about the implementation of the government’s crude-for-naira arrangement. “The big question now is, what quantity does Dangote get in Naira for crude exchange? Then the second question is, what quantity does it not get? If we get that question right, then we’ll be able to determine, are we supposed to still be available for the push and pull of the global economic reality of oil and gas?”

Udoh urged the federal government to increase crude supplies to the refinery under the policy if existing allocations were inadequate. “If the quantity you’re selling for Naira and crude is not sufficient, please kindly increase it so that we will have this product at our stations at available price.”

On concerns over Nigeria’s recent improvement in crude oil production, he dismissed suggestions that official production figures were being exaggerated. “First and foremost, I want to come to the last statement to say that there is no propaganda regarding the quantity of oil Nigeria is producing.”

Udoh explained that Nigeria’s long-standing production challenges had been caused mainly by crude theft. “The inability of Nigeria as a country to produce oil to its optimal is not the availability of the product within the region or non-availability within the wells. It has always been a product of vandalism or other criminalities that have hampered production to the point of calculation.”

According to him, improved protection of oil transportation facilities had contributed to the country’s gradual production increase. “What has happened is that a significant improvement has occurred in the process of transportation of oil from production to calculation since that has been addressed significantly, then we can look at the production possibilities.”

While acknowledging that Nigeria was approaching its OPEC production quota, Udoh emphasised that the country was still below its own budget benchmark for 2026. “We have had an arithmetical progression, not geometric, it must be noted that the budget of 2026 is pegged at 1.84. It means that we may exceed OPEC quota. We have not met our own target.”

He also expressed concern over the speed at which changes in international crude prices were reflected at filling stations. “The challenge is, how quickly will our market or our pump at the filling station respond to either drop in price or increase in price?”

Udoh stressed that regulators had a responsibility to ensure that investors did not exploit market conditions at the expense of consumers. “The regulators must be up and doing for there to be transparency in pricing, because every investor seeks to maximise profits, but the regulator helps keep the investor in check.”

He acknowledged that the Dangote refinery had significantly improved Nigeria’s energy security. “It’s a great investment. It’s responded to our problems that we could not respond to. But the regulator must be efficient and effective in making sure that the rules that govern the process of purchase.”

Udoh argued that long-standing crude swap agreements were undermining the effectiveness of the crude-for-naira policy. “Most of our crude are incumbent already in swaps. There are swaps that were signed many years ago that take the crude out.”

He noted that fuel prices had not remained completely static, pointing to variations in pump prices across retail outlets. “It is not very correct that there were not fluctuations in prices. I noticed that there was 125 Naira differentiation in some instances, and I personally bought 129 the day before yesterday, while before now I’ve bought 152. So there was differentiation. But how quickly will this differentiation reflect?”