The Federal Government has admitted that Nigeria cannot currently supply the Dangote Petroleum Refinery with its full requirement of 700,000 barrels of crude oil daily, blaming production-sharing agreements, oil-related obligations and past fuel subsidy commitments.
Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, made the disclosure during an interview on Channels Television’s Politics Today at the weekend, raising fresh questions about Nigeria’s ability to feed its biggest refinery despite being a major crude oil producer.
Oyedele explained that although Nigeria produces about 1.8 million barrels of crude oil daily, the entire volume is not available for the government to allocate to domestic refiners.
According to him, oil-producing companies receive portions of production under joint ventures and production-sharing contracts, while production costs, royalties and other contractual obligations further reduce the volume accruing to the government.
He explained that the sharing arrangements vary, with producers recovering eligible costs and receiving their contractual entitlements before the government can determine what is available for other commitments.
“The long and short of what I’m telling you is whatever is left for Nigeria, we exhaust it almost entirely because of fuel subsidy,” the minister said.
Oyedele disclosed that the situation was particularly severe before President Bola Tinubu removed the petrol subsidy in May 2023.
According to him, the Nigerian National Petroleum Company Limited, which holds the country’s crude oil on its behalf, had less than 100,000 barrels of freely available crude remaining at the time.
He said the government had exhausted much of its revenue and resorted to printing money before committing future crude oil production to finance present fuel consumption.
“That was a ticking time bomb,” Oyedele said, describing the arrangement as an unsustainable way of meeting the country’s petroleum needs.
The minister, however, said the situation had improved following efforts to increase crude oil production, tackle oil theft and renegotiate some existing commitments that had tied down Nigeria’s crude supplies.
He also referred to complaints previously raised by businessman Tony Elumelu over crude oil theft, noting that subsequent developments had indicated improvements in the situation.
Despite these gains, Oyedele admitted that Nigeria still lacks sufficient freely available crude to meet the full daily requirement of the Dangote refinery.
“But we are still not at the point where we can give Dangote 700,000 barrels,” he said.
The minister also pushed back against proposals that the government should supply the refinery with crude oil at discounted rates or at production cost, arguing that such demands failed to account for the limited volume available for allocation.
“We don’t have enough to service Dangote. Dangote imports crude,” he added.
The admission comes amid continuing debate over the Federal Government’s crude-for-naira arrangement and other measures intended to support local refining, stabilise fuel supply and reduce pressure on petroleum prices.
Oyedele acknowledged that the naira-for-crude arrangement had helped provide some stability but maintained that it had not eliminated the country’s crude supply challenges.
He said the solution would depend on sustained growth in oil production and the release of additional crude volumes from existing commitments.
According to him, Nigeria could eventually reach a point where it would supply Dangote and other domestic refineries with sufficient crude for their operations.
The minister also expressed optimism that Nigeria would one day refine all the crude oil it produces locally and export finished petroleum products instead of shipping crude abroad.
However, achieving that goal would require more than expanding refining capacity. Nigeria must also raise production, reduce losses to theft and ensure that a greater share of its crude is available for domestic processing.
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