Nigeria Lacks Enough Crude for Dangote Refinery – Oyedele

Nigeria’s crude oil production is insufficient to supply the Dangote Refinery and meet the needs of other domestic refiners, Minister of Finance, Taiwo Oyedele, has said.

Oyedele made this known on Friday during an interview over calls for a production subsidy to help local refineries meet domestic demand for petroleum products.

He argued that Nigeria’s reported daily crude oil production does not translate into an equivalent volume available to the Nigerian Government, as part of the output goes to oil companies and other contractual obligations.

“So the people that are saying, ‘We’ll discount it, we’ll do the cost of production,’ don’t know what they’re talking about. We don’t have enough to service Dangote. Dangote imports crude. And I just want us to establish that fact,” Oyedele said.

The minister explained that although Nigeria currently produces about 1.8 million barrels of crude oil daily, the entire volume does not belong to the country.

“Under the production sharing contract and joint venture, they share these things. And the ratios vary. Let’s say roughly 45, 55, right? You do that,” he said.

Oyedele added that crude production costs, royalties and profit-sharing arrangements further reduce the volume available to the Nigerian Government.

“Then there’s the cost. To produce it, to get it out of the ground, you take it in the cost of oil. That’s also barrels that are going away. Then you take the one for royalty. Before you now start talking about profit oil that you share. The long and short of what I’m telling you is that whatever is left for Nigeria, we have sustained it almost entirely because of fuel subsidy,” he said.

Nigeria has less than 700,000 barrels of free crude

Asked how much crude oil remained available to the Nigerian Government after the deductions, Oyedele said the country could not provide 700,000 barrels of uncommitted crude daily to any refinery.

“I don’t want to go into the technicalities, but the reality is that today we do not have up to 700,000 free crude to give anyone, including Dangote,” he said.

The minister said the naira-for-crude arrangement introduced by President Bola Tinubu was intended to provide some stability, although the volume of crude available remained insufficient to meet the needs of domestic refiners.

“That’s why when Mr President introduced the Naira for Crude, it was meant to help us gain some stability. And it has worked, but we don’t have enough quantity to give as of yet,” he added.

He expressed optimism that increased production would eventually enable Nigeria to supply the Dangote Refinery and other local refiners with sufficient crude oil.

“As we ramp up production and we free up some barrels, we’ll get to a point where we’ll be able to give Dangote everything he wants and other refiners will be able to get enough,” Oyedele said.

He added that he hoped Nigeria would eventually refine all the crude it produces locally and export only refined petroleum products.

Debate over fuel subsidy returns

Oyedele’s comments come amid renewed calls for government intervention to ease rising petrol prices, with opposition figures proposing different measures, including production subsidies for local refineries.

On Thursday, the minister disclosed that the Nigerian Government had introduced a 30-day discount on petrol sold by the Nigerian National Petroleum Company Limited.

The announcement attracted criticism from opposition politicians and some Nigerians, who accused the government of reintroducing a fuel subsidy through another arrangement.

President Tinubu scrapped the petrol subsidy in 2023 as part of wider economic reforms that also included allowing the naira to trade more freely.

Although economists have broadly supported aspects of the reforms, they have contributed to higher living costs and increased financial pressure on households.

The removal of the subsidy ended years of government support that had kept petrol prices relatively low, with cheaper fuel also helping to moderate the cost of transporting food and other goods.

Tinubu has maintained that the reforms were necessary to prevent a deeper economic crisis as the subsidy became increasingly expensive for the government to sustain.

Nigeria remains a major crude oil producer and is home to the Dangote Refinery, owned by billionaire industrialist Aliko Dangote.

However, petrol prices have climbed to about N1,400 per litre, compared with approximately N830 before the escalation of conflict in the Middle East, further intensifying the debate over fuel affordability and the government’s role in stabilising prices.