Nigeria currently lacks sufficient crude oil to supply the Dangote Petroleum Refinery with its full requirement of 700,000 barrels per day, Minister of Finance Taiwo Oyedele has said.
Oyedele disclosed this on Friday during an appearance on Channels Television’s Politics Today, explaining that the country must increase production before it can consistently meet the refinery’s demand alongside the needs of other domestic refiners.
According to the minister, even if Nigeria could supply the refinery with the required volume, the quality of locally produced crude would not be sufficient for its optimal operations, making imports of heavier crude grades necessary.
He said the Federal Government introduced the naira-for-crude arrangement to improve stability in the domestic petroleum market and support local refining, although the country’s current production levels remain inadequate to meet the refinery’s entire demand.
Oyedele expressed optimism that increased crude production would eventually enable Nigeria to supply Dangote and other local refiners with sufficient volumes.
He also reiterated the government’s ambition to refine all the crude oil produced in Nigeria domestically and export refined petroleum products instead of relying heavily on crude exports.
The minister explained that Nigeria cannot treat its total daily crude production as oil freely available to the government, noting that substantial volumes are committed to contractual obligations involving international oil companies and other partners.
He said production-sharing contracts and joint ventures determine how crude oil volumes and revenues are distributed among the parties involved.
Under these arrangements, some crude is allocated to recover production expenses, while other portions cover royalties before the remaining profit oil is shared according to agreed terms.
Oyedele said the country’s financial position had been further weakened by the cost of petrol subsidies, which consumed a significant portion of its share of crude oil.
He recalled that before President Bola Tinubu introduced economic reforms, the Nigerian National Petroleum Company Limited, which manages the government’s crude oil interests, had less than 100,000 barrels of uncommitted crude available.
The minister added that the government resorted to printing money when its revenues became insufficient to meet expenditure demands. When that proved inadequate, it began using anticipated future crude production to secure borrowing for present-day spending, including petrol subsidy payments.
He warned that such arrangements created significant financial risks by committing future oil revenues to meet immediate obligations.
Nigeria’s ability to increase crude production and make more volumes available for domestic refining is expected to play a critical role in supporting the Dangote refinery and reducing the country’s dependence on imported petroleum products.
