Dangote Refinery, others seek 597,700 bpd of oil amid tight supply

Nigeria's refineries, including the Dangote Refinery, have increased their domestic crude oil requirements to 597,700 barrels per day (bpd) for the second half of 2024, up from 483,000 bpd in the first half, according to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC). This increase comes despite a tight supply of domestic crude.

In the first six months of the year, the NUPRC was able to secure only 177,777 bpd from oil producers, significantly below what the refineries had requested. This shortfall has created tension between the Dangote Refinery and the regulator. The refinery, which is Africa's largest, has accused the NUPRC of failing to enforce laws that require oil producers to prioritize domestic refineries, leading to increased operational costs for the refinery as it is forced to import more crude oil.

The NUPRC has acknowledged the difficulties faced by oil producers, including operational challenges and pre-existing contracts with traders who financed drilling. The regulator also noted that forcing producers to increase their supply to domestic refineries could violate these contracts.

Despite these challenges, the NUPRC has projected an increase in national crude oil production to 1.7 million bpd by December 2024, up from the 1.57 million bpd it initially projected for January through July—a target that producers did not meet.

Eight refineries are expected to be operational by August, with a combined refining capacity of 864,500 bpd, requiring oil producers to supply over half of this capacity. A total of 52 oil producers, including major companies like TotalEnergies, Chevron, Shell, and ExxonMobil, will supply the crude, primarily through joint ventures with the Nigerian National Petroleum Company Limited (NNPCL).