Dangote Urges Government to End Crude-for-Loan Agreements

The President of Dangote Group, Aliko Dangote, emphasized the need for Nigeria to cease mortgaging its crude oil to ensure sufficient feedstock for local refineries.

Speaking at a summit hosted by the Crude Oil Refinery Owners Association of Nigeria in Lagos, he noted that while countries like Norway are investing oil revenues into future wealth funds, Nigeria and other African nations are depleting future earnings.

“To guarantee adequate feedstock, we must stop mortgaging crude. It’s unfortunate that while Norway invests its oil proceeds, we in Africa are spending what we should save for the future,” Dangote remarked.

On October 4, 2024, The NIGERIA NEWS 247 reported that the Nigerian National Petroleum Company Limited had committed to delivering 272,500 barrels of crude oil daily through various crude-for-loan agreements totaling $8.86 billion. This translates to approximately 8.17 million barrels per month being allocated for these loans.

During the summit, which he attended through Group Executive Director Mansur Ahmed, Dangote stressed the importance of prioritizing domestic crude supply and expanding production capacity to meet refinery demand. He highlighted that the Dangote refinery, capable of processing 650,000 barrels per day, was built without any government incentives.

“To turn Nigeria into a refining hub, we need to incentivize investors,” he added. Dangote pointed out that 1.8 million barrels of new refining capacity will be introduced in Kuwait, China, and Bahrain within the next three years.

Meanwhile, European countries are tightening environmental regulations, leading to a ban on the export of low-quality petroleum products from Holland and Belgium, which were previously sent to Africa.

He noted that several European and Chinese refineries, with a combined capacity of 3.6 million barrels per day, are expected to close in the coming years. “For instance, Scotland’s only refinery is set to shut down next year, and Shell is converting its German refinery into a lubricants plant,” he explained.

Africa currently imports about 3 million barrels per day of petroleum products, with half coming from coastal nations producing over 3.4 million barrels of crude daily. To capitalize on this situation, Dangote emphasized the need for an additional 1.5 million barrels per day of refining capacity, which would require strong government support and collaboration among stakeholders.

In a related development, the Federal Government officially designated the Dangote refinery as the exclusive supplier of Jet A1 fuel for Nigerian airlines. Minister of Aviation Festus Keyamo confirmed this during an interview, stating that the decision stemmed from airline operators’ recent meeting.

He also mentioned the initiation of a naira-for-crude purchasing agreement with Dangote, aimed at shielding airline operators from fluctuations in international oil prices and reducing operational costs.