Report: Why NNPCL May Cut Crude Supply to Dangote Refinery

The New Diplomat
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  • Weighs Options

By Abiola Olawale

Reports emerging on Thursday reveal that the Nigerian National Petroleum Company Limited (NNPCL) may be weighing the option of cutting down the supply of crude oil to the Dangote Petroleum Refinery owned by Africa’s richest man and business magnate, Alhaji Aliko Dangote.

According to the reports, the NNPCL may be forced to start rationalising crude supply to the refineries in the country following the coming up on stream of both the Warri and Port Harcourt refineries unless there is an increase in oil production in the country.

It was gathered that Dangote Refinery currently receives an allocation of 300,000 barrels per day from the NNPCL.

Meanwhile, since the Dangote refinery commenced operations, two of the four national refineries in Nigeria namely Warri and Port Harcourt, have reportedly commenced operations, according to the NNPCL. According to checks, this development might stretch the NNPCL supplies to Dangote and other local refineries.

The NNPCL had declared that the Port-Harcourt refinery and the Warri Refinery have been up and running and refining crude.

Both refineries currently operate at a combined capacity of about 135,000 barrels per day, which was deemed not enough, according to the report.

It would be recalled that the Federal Executive Council (FEC) in 2024 had approved that the total of 450,000 barrels meant for domestic consumption be offered in naira to Nigerian refineries, using the Dangote refinery as a pilot.

Similarly, other refineries with lower capacity were scheduled to receive allocations from the designated 450,000 barrels.

Findings showed that the $20bn Lekki-based plant was allocated about 300,000 barrels per day out of the 450,000bpd approved by the federal government.

Speaking with the press, an insider source stated: “It is clear that crude allocation to Dangote refinery and other local refineries might be reduced because all our refineries are coming back. Old Port Harcourt is working. New Port Harcourt is almost done. Warri just joined last week. “

The source further stressed that the only solution to the impending crude supply cut was for oil production to improve.

The source added: “Warri is now onstream, too, and Kaduna is coming. So the current share of those 450,000 barrels will now be shared between all of them. Remember also that the BUA refinery is coming.

“So, it is very likely that the 300,000 barrels the Dangote refinery is getting currently might be reduced. The formula for how it would be shared is still sketchy, but it is almost certain that it would be reduced. NNPCL won’t deprive itself of crude oil.

“At least, if Port Harcourt will get 50,000 barrels. Other refineries’ share will be reduced to 250,000. Now Port Harcourt will come. Warri, too, is still there. So the only solution to this thing is to increase production, which the government is working hard on.”

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