In a strategic move to support domestic refining and ease reliance on imported fuel, the Nigerian National Petroleum Company Limited (NNPC) has allocated six crude oil cargoes, totaling around six million barrels, to the Dangote Petroleum Refinery for delivery in June 2025. This development comes as the refinery prepares to take in a record nine million barrels of U.S. crude, highlighting an urgent effort to stabilize operations amid ongoing feedstock supply challenges.
NNPC Steps In After Failed Naira Deal
The new cargoes include one medium sweet grade, Escravos, and four light sweet grades: Bonny Light, Brass River, Okwuibome, and Yoho. The move follows months of shortfalls under a six-month government-backed supply agreement that allowed Dangote to pay in naira. That deal, which started in October 2024, struggled to meet delivery targets.
Despite slashing petrol prices and aiming to cut fuel imports, the refinery failed to receive its full crude allocation. Talks are now ongoing to renew or revise the supply terms. NNPC’s latest intervention signals a renewed push to feed the 650,000 barrels-per-day Lagos-based refinery with local oil.
Refinery Turns to U.S. Crude as Local Supply Falters
At the same time, Dangote is ramping up its purchases of U.S. West Texas Intermediate (WTI) crude. In June, it will import nine million barrels—up from just one cargo in May. Traders Vitol and Petraco will supply the shipments. Vitol is sending three cargoes of two million barrels each. Petraco will deliver four million barrels, including a Suezmax shipment.
Although designed to refine Nigerian crude, the refinery has turned to imports due to weak local supply. In recent months, domestic grades have made up less than half of its feedstock. WTI, which trades at competitive rates and is easy to refine, has become a favored option.
NNPC’s May pricing listed Escravos at $1.63 per barrel above Dated Brent, while Bonny Light stood at a 48-cent premium. These prices now compete closely with WTI, even before adding freight costs. In contrast, WTI traded at a 90-cent premium to North Sea Dated on a delivered-Europe basis. Dangote paid similar rates for its June imports, although final prices remain undisclosed.
Global Oil Market Adds Pressure on Nigerian Crude
The global crude surplus has further challenged Nigerian producers. Cheaper alternatives like the Kazakh CPC Blend undercut Nigerian grades by an average of $3.20 per barrel in May. Despite higher shipping costs, CPC remains a better deal for many refiners.
Demand in Europe is down. Some refineries are operating below capacity. At the same time, Asian demand remains weak, creating a glut of light crude. With European intake of WTI expected to fall to 1.5 million barrels per day in June, Dangote has become a key buyer for U.S. suppliers.
Regulators Struggle to Enforce Domestic Supply
Nigeria’s upstream regulator, the NUPRC, has admitted that International Oil Companies (IOCs) are not meeting their domestic crude supply obligations. This failure continues to force Dangote to look abroad for feedstock. Until enforcement improves, the refinery may have no choice but to maintain a mix of imported and local crude.
NNPC’s latest allocation marks a step in the right direction. But without a consistent domestic supply and competitive pricing, Nigeria risks undermining its own efforts to build refining self-sufficiency.
Outlook: Dangote Caught Between Local Policy and Global Pricing
The refinery’s dual strategy of blending local allocations with rising U.S. imports shows the difficulty of managing oil supply in a global market. As the government pushes to reduce fuel imports and strengthen domestic refining, Dangote must navigate price pressures, policy gaps, and shifting trade flows.
Whether the June allocation signals a turning point or just a temporary fix will depend on follow-through from both regulators and producers.