Oyedele dismissed suggestions that the Federal Government should provide crude oil to the Dangote Refinery at production cost, arguing that such proposals do not adequately reflect the realities of Nigeria’s crude oil sector.
He stressed that the country’s daily production figures should not be mistaken for the volume of crude oil freely available to the government.
According to the finance minister, Nigeria produces about 1.8 million barrels of crude oil daily, but the output is shared among parties operating under production-sharing contracts and joint-venture arrangements.
He explained that the allocation process involves sharing production with partners, recovering the costs incurred in extracting crude oil and meeting royalty obligations before the remaining profit oil is distributed.
Oyedele said these deductions significantly reduce the volume of crude oil available for the Federal Government to allocate to domestic refiners.
He stated that Nigeria currently has less than 700,000 barrels of uncommitted crude oil available for allocation, making it difficult to meet the Dangote Refinery’s full requirements.
“I don’t want to go into the technicalities, but the reality is that today we do not have up to 700,000 free crude to give anyone, including Dangote,” the minister said.
Why Dangote Refinery Still Imports Crude Oil
The finance minister’s remarks also explain why the Dangote Refinery continues to import crude oil despite being located in one of Africa’s largest oil-producing countries.
Nigeria’s crude oil production is subject to contractual obligations and other deductions, meaning the government cannot simply direct the entire national output to local refineries.
Oyedele noted that the available volume of crude oil has limited the government’s ability to meet the refinery’s requirements under the naira-for-crude arrangement introduced by President Bola Tinubu’s administration.
He said the policy was designed to help stabilise the domestic petroleum market but acknowledged that the country does not yet have sufficient quantities of crude oil to meet all the demands placed on the arrangement.
According to the minister, the continued need for crude imports by the Dangote Refinery reflects the gap between Nigeria’s total crude production and the quantity available for domestic allocation.
FG Says Increased Crude Oil Production Could Solve Supply Challenges
Oyedele expressed optimism that Nigeria could eventually supply the Dangote Refinery and other domestic refiners with sufficient crude oil if production increases and more barrels become available for allocation.
He explained that expanding production would improve the government’s ability to meet the requirements of local refineries while reducing the need for imported crude.
The minister also expressed his personal ambition for Nigeria to reach a point where all the crude oil it produces is refined locally, with the country exporting refined petroleum products rather than predominantly exporting crude oil.
“As we ramp up production and we free up some barrels, we’ll get to a point where we’ll be able to give Dangote everything he wants and other refiners will be able to get enough,” Oyedele said.
He added that he hoped Nigeria would eventually refine all its crude oil domestically and export only refined products.
What This Means for Nigeria’s Petroleum Sector
The Federal Government’s position highlights the challenges facing Nigeria’s ambition to maximise domestic refining and reduce dependence on imported petroleum products.
Although the country produces substantial volumes of crude oil, contractual commitments and production-related deductions affect how much is available for local refineries.
The availability of sufficient crude oil remains an important factor in determining whether the Dangote Refinery and other domestic operators can secure enough feedstock to meet local demand consistently.
The government’s expectation is that higher crude oil production will improve domestic supply and support the development of Nigeria’s refining industry.
However, until more crude oil becomes available for allocation, the Dangote Refinery may continue to rely partly on imported crude to meet its operational requirements.