The Dangote Refinery, Nigeria's largest refinery, may halt petrol supply to the Nigerian market due to unresolved issues surrounding the naira-for-crude oil exchange deal. The refinery, which has a production capacity of 650,000 barrels per day, is a critical player in Nigeria's efforts to achieve self-sufficiency in petroleum products. However, the unresolved naira-for-crude arrangement has created uncertainties regarding crude supply, potentially delaying the refinery's full operations and limiting its ability to distribute petrol domestically.

The naira-for-crude policy, introduced by the Nigerian National Petroleum Company (NNPC) Limited, requires local refiners to purchase crude oil in naira instead of dollars, aiming to stabilize foreign exchange reserves. Under this agreement, the refinery sold Premium Motor Spirit (PMS) to Nigerian marketers in naira because it purchased crude in the local currency. However, with the deal set to expire this month, negotiations to renew the naira-for-crude arrangement have not made significant progress, prompting the refinery to announce plans to halt the loading of petroleum products for the Nigerian market.

Analysts warn that Dangote's reluctance to supply the Nigerian market could exacerbate fuel scarcity and increase dependence on imported refined products, undermining the country's energy security goals. If local refineries, including Dangote, are forced to source crude in dollars, production costs could rise significantly, putting additional pressure on the naira and ultimately leading to an increase in petrol pump prices.

The situation highlights the broader challenges in Nigeria's oil and gas sector, including foreign exchange volatility and regulatory uncertainties, which continue to impact investment and operational efficiency. The Nigerian government may have to negotiate new terms to ensure that the Dangote Refinery remains a reliable source of petroleum products for the local market.

According to NNPC's Chief Corporate Communications Officer, Olufemi Soneye, the initial agreement was structured as a six-month contract, set to expire in March 2025. Negotiations are ongoing for a new deal with Dangote Petroleum Refinery, but the outcome remains uncertain.

The potential halt in petrol supply from Dangote Refinery comes amid concerns that Nigerians may face another hike in petrol prices after reports emerged that NNPC has halted its naira-for-crude deal with Dangote and other local refineries. The development underscores the need for a sustainable solution to Nigeria's energy challenges, ensuring a stable supply of petroleum products to meet domestic demand.

In the face of these challenges, the Nigerian government must navigate the complex landscape of oil and gas production, refining, and distribution to ensure energy security and stability for its citizens. As the situation unfolds, it remains to be seen whether a new deal can be reached to salvage the naira-for-crude arrangement and prevent a potential fuel crisis in Nigeria.