The Nigerian National Petroleum Company Limited (NNPCL) has sold $21.5 billion worth of crude oil in advance deals over the past six years, expressing concerns about the impact on local refiners. These forward oil sales, where NNPCL collects money upfront for future crude production, have left Nigeria struggling to meet domestic supply obligations.
Crude Sales Over Local Supply
These deals help the government secure quick cash but reduce the crude available for local refineries like the Dangote Refinery and modular plants. Under the Domestic Crude Supply Obligation (DCSO), NNPCL is supposed to set aside crude for Nigerian refiners to reduce fuel imports. However, most of Nigeria’s oil is already tied up in these deals, making it harder for local refiners to operate at full capacity.
A source familiar with the issue explained, “These sales bring in money when the government needs it, but they leave refineries uncertain about crude supply.”
Impact on Local Refineries
Nigeria’s biggest refinery, Dangote, which can process 650,000 barrels per day, has struggled to get crude from NNPCL. Modular refineries face even bigger problems, forcing some to shut down or buy crude from foreign markets at higher prices.
Oil and gas expert Dr. Adeola Yusuf warned that this could harm Nigeria’s energy security. “If we keep selling our crude to foreign buyers in advance, we will always depend on imported fuel,” he said.
Calls for Transparency
NNPCL argues that forward sales are necessary to pay off debts and cover costs, especially with unstable oil prices. However, critics say the government has not explained how the $21.5 billion was used. Many in the oil industry are demanding greater transparency to ensure local refineries get the crude they need.
For now, Nigeria’s refining future remains uncertain, as the government has not announced a plan to balance crude sales with local supply.