Oyedele: Nigeria can’t meet Dangote refinery’s 700,000 bpd crude needs

Taiwo Oyedele, minister of finance, says Nigeria does not yet have sufficient crude oil to meet the Dangote refinery’s full requirement of 700,000 barrels per day.

Oyedele spoke on Friday when he appeared on Channels Television’s ‘Politics Today’ programme.

“But we are still not at the point where we can give Dangote 700,000 barrels. So the people that are saying we’ll discount it, we’ll do the cost of production, they don’t know what they’re talking about. We don’t have enough to service Dangote,” Oyedele said.

“I need to say that even if we have 700,000 barrels today to give Dangote — the Nigerian crude is the sweet crude — it would not be the most optimal input for Dangote. Dangote needs to still import some heavy crude.

“So 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.”

Oyedele said this was why President Bola Tinubu introduced the naira-for-crude deal, which was “meant to help us gain some stability”.

“And it has worked, but we don’t have enough quantity to give as of yet. 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,” the minister said.

He said he hoped Nigeria would eventually refine all the crude oil it produces locally and export only refined products.

Furthermore, Oyedele explained the forward sale arrangements, saying “if you do 1.8 million barrels per day, that does not belong to Nigeria alone”.

The minister explained that under production-sharing contracts and joint ventures, crude oil is allocated among the parties at varying ratios, roughly 45:55.

He said a portion of the crude is used to cover production costs, known as cost oil, while another portion is allocated to royalties before the remaining profit oil is shared.

The minister said Nigeria had almost entirely exhausted its share of crude oil due to petrol subsidy.

He said before Tinubu introduced the reforms, the Nigerian National Petroleum Company (NNPC) Limited, which holds the country’s crude on its behalf, had less than 100,000 barrels of free crude remaining.

Oyedele said the government resorted to printing money after exhausting its revenues, but the funds were insufficient to meet its needs.

The minister added that the government then began using future crude oil production to secure borrowing for subsidising current consumption, describing the arrangement as a potential crisis waiting to happen.