Market News

The Naira-for-Crude policy, implemented in October 2024, reduces forex pressure and supports local refining.

By Nosakhale Akhimien

The Dangote Petroleum Refinery has said the Federal Government’s Naira-for-Crude policy has significantly contributed to stabilising the naira and should be expanded in Nigeria’s overall economic interest. 

The newly appointed Managing Director of Dangote Refinery Plc, David Bird, disclosed this during a press briefing at the refinery complex in Lagos, where he provided an update on the company’s crude oil supply arrangements under the policy.

Responding to questions on the effectiveness of the Naira-for-Crude programme and the refinery’s level of satisfaction with the current supply framework, Bird described the initiative as a strong indication of government support for domestic refining.

“I think it’s a great testimony to the level of government support that we get,” he said on Wednesday.

According to Bird, between 30 and 40 per cent of the refinery’s current crude feedstock is sourced under the Naira-for-Crude arrangement, with ongoing monthly engagements between the refinery and the Nigerian National Petroleum Company Limited (NNPC) to determine suitable crude grades.

“Let’s say between 30 and 40 per cent of our current crude diet is on the crude-for-naira programme. We engage with NNPC monthly on the grades to buy because there is a lot of variability in the Nigerian crude grades.

“So we have a preference, we have a wish list, and we continue to work with government support to ensure we get the right allocations,” he explained.

Bird noted that while the refinery is optimised for Nigerian crude, supply volumes fluctuate.

He said approximately 30 per cent of crude supply is obtained through the Naira-for-Crude programme, another 30 per cent from Nigerian crudes purchased on the spot market, while the remaining 40 per cent comes from international grades.

Despite this mix, he said the refinery would welcome an expansion of the policy.

“Definitely, we would always like to enhance the crude-for-naira programme. Even at that level, five cargoes a month, for example, it has contributed to the stabilisation of the naira enormously,” Bird said.

NNPC Engagement

Bird added that the refinery has the capacity to absorb additional crude volumes if allocations are increased, noting that continued engagement with NNPC and the Federal Government is ongoing.

“We would have the potential to take further grades if and when, and we continue to engage with NNPC and the government on further increasing that,” he said.

Bird also pointed to global geopolitical uncertainties as a reason Nigeria should prioritise domestic crude supply.

“It is in the country’s interest to supply domestically, because geopolitically it’s a very volatile situation. If Venezuelan crude comes back on the market, for example, it is in Nigeria’s interest to secure an offtaker through domestic refining,” he said.

The Naira-for-Crude policy, which began in October 2024, allows local refineries to purchase crude oil from NNPC in naira instead of US dollars.

This approach reduces pressure on foreign exchange, lowers transaction costs, stabilises the local currency, and strengthens domestic refining capacity.

Under the arrangement, refineries supply petroleum products to the Nigerian market in naira, helping to retain more value within the local economy.