By Uche Amunike
The suspension of crude supply to the Dangote Refinery and other refineries, by the Nigerian National Petroleum Company Limited affected the output of the Organization of the Petroleum Exporting Countries (OPEC) in March.
This disclosure was made after a survey by Reuters discovered that OPEC oil output fell in March because Nigeria curbed deliveries to domestic refineries. According to the survey, crude supply from Nigeria, Iran and Venezuela fell by 50,000 bpd each in the month of March.
According to Reuters, Nigeria’s supply declined as a result of reduced deliveries to the Dangote Refinery, thereby offsetting higher exports. They further stated that Nigeria is pumping slightly above its quota by OPEC.
The survey showed that in March, OPEC pumped 26.63 million barrels per day, down 110,000 bpd from February’s total, with Nigeria, Iran and Venezuela posting the largest drops of 50,000 bpd each.
Iranian and Venezuelan supply already dropped on renewed United States attempts to curb the flows, even as NNPC delayed the delivery of seven cargoes of crude oil it allocated to the Dangote refinery last month.
According to a report by S&P global, the supply was delayed by the NNPC when both parties failed to agree on payment terms. It further disclosed that the cargoes were to deliver about 245,000 barrels per day in April which amounts to 7.2 million barrels in 30 days.
It stated: ‘According to trade sources and Nigerian port authorities, NNPC has allocated seven crude oil cargoes to deliver around 245,000 barrels per day to the Dangote site in April but is yet to agree on payment terms.’
According to a news report by the PUNCH, Dangote Refinery and NNPC have been entangled in disputes over payment terms, following the seeming termination of the Naira-for-crude deal.
Apart from the seeming termination of the Naira deal, sources claim that the credit facilities given to Dangote were withdrawn and the refinery is now expected to submit letters of credit before the delivery of crude cargoes. Efforts to get an NNPC official to comment on the matter yielded no results as he claimed that transactions are not done in the open.
Recall that as part of an initiative to deflate Nigerian fuel prices, NNPC began the Naira-for-crude deal with Dangote Refinery in October 2024. According to NNPC figures, however, S&P Global stated that the national oil companies delivered roughly 280,000 bpd of crude to Dangote in Naira by March 10, falling short of the 385,000 b/d under the deal.
The six month deal ended yesterday, but there are growing concerns that the federal government may not renew it, thereby leading to a hike in fuel prices after the announcement of the suspension of Naira fuel sales by the Dangote Refinery.
In addition to foreign exchange shortages and debt concerns however, NNPC is now battling new challenges with instability and pipeline sabotage in Rivers State which is greatly clouding its production outlook.
The Dangote Executive, in contrast to government rhetoric, is skeptical about a new Naira-for-crude deal being renewed.
Apart from the challenges being faced by the NNPC, he argued that the obligation for Dangote to sell its oil products in Naira under the deal had become a drag on its operations, as the refinery was left exposed to price fluctuations by fixing contract prices to dollar-based benchmarks and converting them into Naira at the point of sale.
Crude oil grades from Nigeria, according to earlier reports, faced tepid demand in the April trade cycle, because, ample availability of lower priced alternatives like US WTI, Caspian CPC Blend and other Mediterranean grades , enticed buyers from Europe.
According to the report, however, the trade cycle has since shifted to May, with as much as 15 April-loading Nigerian cargoes in search of buyers.
