The Nigerian National Petroleum Company Limited, NNPCL has dismissed claims that it has terminated the Naira-for-Crude agreement with Dangote Refinery, reaffirming its commitment to supporting local refining. The company clarified that the contract was designed as a six-month agreement and is set to expire at the end of March 2025. Discussions are currently ongoing to establish a new deal.

In a statement on Monday, NNPCL’s Chief Corporate Communications Officer, Olufemi Soneye, emphasized that since the refinery began operations in 2023, the company has supplied a total of 84 million barrels of crude oil. Out of this, 48 million barrels were delivered under the Naira-for-Crude arrangement, which commenced in October 2024.

The Naira-for-Crude initiative was introduced to boost domestic refining by allowing local refiners to purchase crude oil in naira instead of dollars. The arrangement was expected to ease pressure on foreign exchange reserves, stabilize the naira, and reduce Nigeria’s dependence on imported petroleum products.

Concerns arose when reports suggested that NNPCL had scrapped the deal, sparking fears that domestic refiners, including the 650,000-barrels-per-day Dangote Refinery, would have to source crude from international suppliers and pay in dollars. This shift could escalate operational costs and potentially drive up fuel prices.

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Industry experts warn that without a renewed agreement, the Dangote Refinery and other private refiners, such as Waltersmith Petroman and BUA Refinery, may struggle to access affordable feedstock. The deal had provided them with a cost-effective way to secure crude oil, enabling them to compete with global players.

Economic analysts have also expressed concerns over the potential impact on the country’s currency and overall economy. The naira has faced significant volatility in recent months, and the removal of this dollar-saving mechanism could further weaken its value. Additionally, an increase in refining costs may translate to higher fuel prices for consumers.

Despite these concerns, NNPCL reassured that it remains committed to supplying crude oil for local refining under mutually agreed terms. The company emphasized that negotiations are ongoing and that it continues to prioritize the development of Nigeria’s refining capacity.

As discussions progress, stakeholders in the oil and gas sector are closely monitoring the outcome, as it could influence Nigeria’s energy security and long-term efforts to achieve self-sufficiency in petroleum production.

Reported by Century Post.