Africa’s biggest refinery has started pricing fuel in U.S. dollars because Nigeria can’t supply enough Nigerian crude to keep it running.
Dangote Petroleum Refinery, which can process 700,000 barrels of crude per day, said it is switching domestic gasoline, diesel, and jet fuel pricing to dollars after struggling to secure enough barrels through the government’s naira-for-crude program. Gasoline is now priced at $0.779 per liter, diesel at $1.087, and jet fuel at $0.942.
The refinery says it needs 13 to 15 crude cargoes every month. State-owned NNPC supplied seven cargoes in May, up from about five previously. Dangote has been buying the balance on the international market, where crude is priced in dollars.
Nigeria introduced the naira-for-crude program in 2024 to do exactly the opposite. Domestic refiners would buy Nigerian crude in naira, reducing pressure on the country’s foreign exchange market and cutting exposure to the dollar. Dangote’s latest move suggests the program isn’t delivering enough crude to Africa’s largest refinery.
That leaves Nigeria in an awkward spot. The country exports well over 1 million barrels of crude every day, yet its flagship refinery still imports part of the oil it processes.
Dangote has already reshaped Nigeria’s fuel market. Imports of gasoline have fallen sharply since the refinery ramped up production, ending decades of dependence on foreign fuel. Crude has become a scarce commodity.
Fuel marketers won’t be paying in dollar bills. They’ll pay the naira equivalent. The benchmark, though, now follows the dollar. Every swing in the exchange rate has a more direct path into wholesale fuel prices.
The refinery has spent months absorbing the difference between buying crude in dollars and selling fuel in naira. Dangote has decided that the experiment is over.
Nigeria solved one problem by building a refinery capable of supplying much of the country’s fuel demand. Keeping that refinery supplied with Nigerian crude is proving to be a separate problem entirely.
By Julianne Geiger for Oilprice.com
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