Naira-for-Crude Deal: We are Renegotiating, Not Cancelling Agreement, Says NNPC

•Discloses 48m barrels of oil supplied Dangote since October 2024 

•Zacch Adedeji-led committee says FG not mulling termination of deal

Emmanuel Addeh and James Emejo in Abuja  

Nigerian National Petroleum Company Limited (NNPC) and the federal government yesterday said there were no plans to revoke the naira-for-crude deal with local oil refineries, including the 650,000 barrels per day (bpd) Dangote refinery in Lagos.

Both NNPC and Chairman, Technical Sub-Committee of the Naira-for-Crude programme, Zacch Adedeji, who also heads the Federal Inland Revenue Service (FIRS), were reacting to reports in a section of the media that the oil swap deal with domestic refiners had been cancelled.

The arrangement was introduced on October 1, 2024, and it allowed local refiners to purchase crude oil in naira, instead of dollars. The initiative was designed to support domestic refining capacity, reduce reliance on imported petroleum products, and stabilise the local currency by easing pressure on foreign exchange reserves.

Quoting sources familiar with the development, the reports said NNPC had informed local refiners that it had already committed its crude oil production to forward contracts, leaving no supply available for domestic refineries.

But in a statement signed by NNPC’s spokesman, Olufemi Soneye, the national oil company stated that it remained committed to supplying crude oil for local refining based on mutually agreed terms and conditions.

The statement explained that NNPC was already in discussions with the local refining facilities, including Dangote refinery, to renegotiate the deal, which expires this March, in the first instance.

The national oil company stated, “NNPC Limited has noted recent reports circulating on social media regarding the alleged unilateral termination of the crude oil sales agreement in Naira between NNPC and Dangote Refinery.

“To clarify, the contract for the sale of crude oil in Naira was structured as a six-month agreement, subject to availability, and expires at the end of March 2025. Discussions are currently ongoing towards emplacing a new contract. 

“Under this arrangement, NNPC has made over 48 million barrels of crude oil available to Dangote Refinery since October 2024.  In aggregate (terms), NNPC has made over 84 million barrels of crude oil available to the refinery since its commencement of operations in 2023.

“NNPC Limited remains committed to supplying crude oil for local refining based on mutually agreed terms and conditions.” 

Adedeji said the earlier reports did not reflect the realities on the ground.

He stated, “Our attention has been drawn to reports doing the rounds and suggesting that the naira-based crude oil supply arrangement with local refineries has been discontinued, forcing the domestic refineries to rely solely on international crude purchases.

“These reports do not reflect the realities of the ongoing work under the Federal Executive Council (FEC) initiative on domestic sales of crude oil and refined products in naira. As the committee driving the implementation of this laudable initiative, we wish to provide an update on the FEC initiative and confirm as follows:

“The policy framework enabling the sale of crude oil in naira for domestic refining remains in force. The initiative was designed to ensure supply stability and optimise the utilisation of local refining capacity.

“There has been no decision at the policy level to discontinue this approach nor is it being considered. After implementing the policy for some months, evidence abounds that it is the right way to go and it will continue to help the economy.”

He added that the engagement process for crude oil supply to domestic refineries remained in place by structured agreements, balancing factors, such as availability, demand, and market conditions.

According to the FIRS boss, there is no exclusion of local refineries from access to domestic crude as reported.

Adedeji stated, “The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) is actively ensuring compliance with the Domestic Crude Oil Obligations provisions of the Petroleum Industry Act (PIA). The framework for domestic crude transactions is designed to promote a competitive and efficient pricing environment.

“We remain committed to ensuring the efficient execution of this initiative in line with its core objectives – enhancing local refining, reducing foreign exchange exposure, and stabilising the domestic fuel supply.”