As Warri, Port Harcourt Refineries Begin Operations, FG Reviews Dangote Crude Supply
Refinery
As Warri, Port Harcourt Refineries Begin Operations, FG Reviews Dangote Crude Supply
The Nigerian government is adjusting its crude oil distribution strategy following the recent resumption of operations at the Warri and Port Harcourt refineries. This development is expected to impact the crude allocation to the Dangote Petroleum Refinery.
After about a decade of inactivity, the Warri Refinery has resumed partial operations. The Nigerian National Petroleum Corporation Limited (NNPCL) announced that the refinery is now operating at 60% capacity, processing approximately 600,000 barrels of crude per day. Similarly, the Port Harcourt Refinery recommenced operations in November 2024, aiming to enhance domestic fuel production.
As Warri, Port Harcourt Refineries Begin Operations, FG Reviews Dangote Crude Supply.
With the reactivation of these state-owned refineries, the government is considering reducing the crude oil supply to the Dangote Refinery, which was previously allocated about 300,000 barrels per day. This adjustment is part of the government’s naira-for-crude initiative, designed to ensure equitable distribution of crude among all local refineries. The exact distribution formula remains under discussion, but a reduction in Dangote’s allocation appears imminent unless there is a significant increase in Nigeria’s overall oil output.
In response to the anticipated reduction in domestic crude allocation, the Dangote Refinery may need to import crude oil to maintain its operations. These imports would be subject to international market prices, potentially affecting the refinery’s production costs and pricing strategies.
Additionally, the government has ceased selling crude on credit to local refineries, including the Dangote Refinery, as part of efforts to improve revenue collection. This policy shift underscores the government’s focus on enhancing financial returns from the oil sector.
These developments highlight the dynamic nature of Nigeria’s oil industry as the government seeks to balance crude oil distribution among operational refineries to optimize domestic fuel production and revenue generation.
