The minister said the government could not currently allocate 700,000 barrels a day to the refinery, despite efforts to increase production and release barrels tied to existing commitments.
His comments expose a contrast often lost in Nigeria’s oil debate, the country’s total production is larger than the volume its government owns and can supply to domestic refiners.
The refinery can purchase crude from other producers and international markets. The shortage described by Oyedele concerns available domestic allocations, rather than an announcement that the plant has run out of feedstock.
“We don’t have enough to service Dangote,” Oyedele said during Channels Television’s Politics Today programme on 9 October. He explained that production-sharing arrangements, costs and other obligations reduce the oil available to the government.
Why producing oil does not guarantee supply
Under Nigeria’s production-sharing contracts and joint ventures, oil is allocated between the state and its commercial partners. Production costs and royalties must also be accounted for before determining the government’s available share.
Oyedele said earlier borrowing secured against future oil production had further constrained that supply. The government had renegotiated some commitments and reduced theft to free additional barrels, but could not yet meet every domestic refiner’s needs.
He also noted that importing crude is not solely a response to insufficient Nigerian supply. Different grades can help a refinery achieve its preferred product mix and processing economics.
According to Oyedele, Dangote would still need some heavier crude even if sufficient Nigerian sweet crude were available. He did not disclose the refinery’s current shortfall or the exact volume the government could allocate.
Expansion raises the stakes
Dangote’s own facilities information lists current crude-distillation capacity at 700,000 barrels a day, with an expansion pathway to 1.4 million barrels a day.
The proposed doubling would increase the importance of dependable supplies from several sources. It would also deepen the refinery’s role in supplying fuel to Nigeria and export markets across Africa.
The company has already built flexibility into its sourcing. Its prospectus disclosed that the refinery had processed 36 crude grades from Africa, South America, the United States and the Middle East by 30 June 2026.
The prospectus nevertheless warned that supply arrangements could not guarantee uninterrupted deliveries, making crude availability a material issue for both production and expansion.
Payment reform cannot create additional barrels
Nigeria introduced its domestic-currency crude-sales arrangement in October 2024 to support local refining and reduce foreign-exchange pressure. The finance ministry’s original implementation documents confirm that the programme was intended to change how qualifying crude purchases were paid for.
Oyedele said the arrangement had improved stability, but payment reform could not resolve the shortage of available barrels by itself.
His admission places crude ownership and existing commitments alongside production growth in the debate over Nigeria’s refining ambitions. Increasing output matters, but so does determining how much of that oil can reach domestic plants.
Source: africa.businessinsider.com
