In a significant shift for Nigeria’s energy sector, the Nigerian National Petroleum Company Limited (NNPC) announced it has permanently ended its decades-long practice of importing petroleum products.
This decision, which aligns with the government’s ongoing push for economic self-sufficiency, is expected to save the country up to $10 billion annually in foreign exchange. By sourcing products locally, NNPC will rely exclusively on the 650,000 barrels per day Dangote Petroleum Refinery, located in Lagos.
The NNPC’s Chief Executive Officer, Mr. Mele Kyari, disclosed this transformative development during the 42nd Annual International Conference and Exhibition of the Nigerian Association of Petroleum Explorationists (NAPE) in Lagos.
Kyari emphasized that this move is a deliberate step towards economic sustainability, driven by a commitment to strengthen local production and reduce dependence on costly imports.
“From day one, we knew it was to our benefit to supply crude oil to domestic refineries. This decision is well-informed and strategic for the future,” Kyari stated.
This announcement coincided with another major breakthrough as the Independent Petroleum Marketers Association of Nigeria (IPMAN) disclosed it had reached an agreement to purchase petroleum products directly from the Dangote Refinery.
Previously, independent marketers were required to buy their products from NNPC rather than directly from the refinery, a policy that had been met with resistance by industry stakeholders seeking more autonomy in sourcing.
Under the revised framework, IPMAN members now have direct access to Dangote’s $20 billion refinery for their supply needs, bypassing the traditional NNPC distribution route.
This new arrangement allows for streamlined operations and is expected to promote greater stability and cost savings within the downstream petroleum sector.
Commenting on this shift, IPMAN President Abubakar Shettima said, “All IPMAN members should fully support the Dangote Refinery, as it’s the ideal thing to do considering the monumental benefits of backward integration.”
Meanwhile, in line with the Domestic Crude Oil Obligation (DCOO) enshrined in the Petroleum Industry Act (PIA) of 2021, Kyari reiterated that all oil producers within Nigeria would be required to supply crude to the country’s four refineries once they resume operations.
This mandate ensures that locally sourced crude oil will meet the refineries’ needs, ultimately reducing Nigeria’s dependence on imported products and stabilizing the local currency.
Addressing concerns regarding the NNPC’s commitment to local refining, Kyari dismissed suggestions that the company was reluctant to supply crude to domestic facilities.
He clarified that NNPC is fully aligned with the country’s domestic refining goals. “There is no need for any pressure from the streets for us to do this. We are already doing this,” Kyari assured.
Kyari further explained that NNPC’s strategic partnership with the Dangote Refinery aligns with the company’s goal of minimizing exposure to the volatile international crude market.
By securing a long-term supply agreement, NNPC ensures a stable market for at least 300,000 barrels per day of its crude production, thereby shielding itself from potential shifts in global demand.
“We are proud part-owners of the Dangote Refinery, and this partnership represents a strong and practical business decision,” Kyari explained.
Emphasizing the high global demand for Nigerian crude due to its premium quality, Kyari highlighted the strategic advantage of processing it locally. Nigerian crude, known for its light and low-sulfur characteristics, is a sought-after commodity that often commands a premium in the global market.
“Refiners buy Nigerian crude to blend with their heavier, dirtier crude grades to meet quality standards,” he noted. This move, he explained, will now ensure that the benefits of this premium product are maximized domestically.
Kyari revealed that in line with this shift, the NNPC has now stopped importing refined products entirely, fully committing to locally refined fuel from the Dangote Refinery and others that may arise.
“Today, NNPC does not import any product. We are taking wholly from the domestic refinery,” he asserted, highlighting the company’s commitment to building a robust local refining capacity.
In addressing the anticipated challenges of this transition, especially around pricing, Kyari confirmed that the NNPC was working closely with the federal government to manage the implications of an entirely domestic supply chain.
“We’ve done substantial work on pricing mechanisms, and we’re confident this will no longer be a stumbling block,” he said.
Kyari also countered industry perceptions that supplying local refineries in naira rather than foreign currency would undercut revenue.
According to him, any currency shift in transactions with domestic refineries would be economically neutral. “It’s a net-zero game. Selling crude to domestic refineries in naira and buying products in naira ensures that no financial value is lost, and it strengthens our local currency,” he clarified.
Looking ahead, Kyari reminded other Nigerian oil producers that the DCOO applies equally to all, meaning they, too, would be required to supply the country’s four refineries when they resume operations.
“This is a law-based obligation. We will come to you when the time comes, and it’s a shared responsibility across the industry,” he noted.
In support of the federal government’s efforts to expand the natural gas market, Kyari noted that the NNPC had been responsible for building the nation’s entire gas delivery infrastructure. By the first quarter of 2025, he confirmed, 12 new compressed natural gas (CNG) stations will be operational, further boosting Nigeria’s energy security.
Moreover, Kyari announced that NNPC was constructing a mini Liquefied Natural Gas (LNG) plant to improve gas accessibility for domestic power plants and gas-based industries. This initiative is part of NNPC’s broader strategy to provide cleaner and more affordable energy options within Nigeria.
Also present at the NAPE conference, the Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Mr. Gbenga Komolafe, highlighted recent increases in the country’s oil production capacity. Represented by the Executive Commissioner, Development and Production, Mr. Eronense Amadasu, Komolafe reported that production had reached 1.8 million barrels per day and was projected to climb to 2 million bpd by December 2024.
Meanwhile, IPMAN has called for collaborative efforts to promote the adoption of CNG. “A credible partnership between IPMAN and the Presidential Compressed Natural Gas Initiative (PCNGI) is essential to drive the CNG initiative forward,” Shettima stated, advocating for increased support from the federal government.
