Nigeria does not currently have enough unallocated crude oil to fully supply the Dangote Refinery and meet the needs of other domestic refiners, Minister of Finance Taiwo Oyedele has said.
Oyedele made the disclosure on Friday during an appearance on Channels Television’s Politics Today, amid growing calls for the Federal Government to introduce a production subsidy to support local refineries.
He said Nigeria’s daily crude oil production of about 1.8 million barrels does not translate into an equivalent volume available to the Federal Government because of contractual obligations, production costs and royalty payments.
Why Nigeria Cannot Supply All of Dangote’s Crude Needs
According to Oyedele, crude oil produced in Nigeria is shared among parties operating under production-sharing contracts and joint ventures.
He explained that production costs, royalties and profit-sharing arrangements further reduce the volume available to the government.
“So the people that are saying, ‘We’ll discount it, we’ll do the cost of production,’ don’t know what they’re talking about. We don’t have enough to service Dangote. Dangote imports crude. And I just want us to establish that fact,” he said.
The minister added that Nigeria currently has fewer than 700,000 barrels of unallocated crude oil available for supply to any buyer, including the Dangote Refinery.
“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,” Oyedele said.
FG Plans to Increase Crude Oil Supply
Oyedele said the Federal Government’s naira-for-crude arrangement was introduced to help stabilise domestic fuel supply, adding that the initiative had delivered some results despite the current volume constraints.
He said Nigeria could supply Dangote and other local refiners with more crude oil as production increases and additional barrels become available.
“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,” he said.
The minister also expressed hope that Nigeria would eventually refine all the crude oil it produces domestically and export refined petroleum products instead of exporting crude oil.
Fuel Subsidy Debate Intensifies
Oyedele’s comments come amid renewed calls for the return of fuel subsidies, with opposition figures proposing different measures to reduce petrol prices and ease the pressure on Nigerians.
Some have advocated a production subsidy for domestic refineries, arguing that government support could help increase local refining and improve the availability of petroleum products.
On Thursday, Oyedele disclosed that the Federal Government had introduced a 30-day petrol discount at Nigerian National Petroleum Company Limited (NNPCL) retail outlets.
The initiative attracted criticism from opposition politicians and other Nigerians, who questioned whether the discount amounted to a subsidy introduced through the back door.
The Federal Government, however, has maintained that the temporary discount is different from the former fuel subsidy arrangement.
Tinubu’s Reforms and Rising Petrol Prices
President Bola Tinubu introduced sweeping economic reforms after taking office in 2023, including the removal of the petrol subsidy and the liberalisation of the naira’s exchange rate.
Although economists have broadly supported aspects of the reforms, the measures have contributed to higher living costs and intensified economic pressure on households and businesses.
For many Nigerians, cheaper petrol had helped moderate the cost of transporting people and goods, as well as the prices of some essential commodities.
Tinubu has defended the reforms, arguing that the previous subsidy system had become fiscally unsustainable and that its removal prevented a more severe economic crisis.
Nigeria is Africa’s leading oil producer and home to the continent’s largest refinery, owned by billionaire industrialist Aliko Dangote.
However, petrol prices have risen to about ₦1,400 per litre, compared with roughly ₦830 before the recent conflict in the Middle East, according to the figures cited in the original report.
The debate over crude oil allocation, domestic refining and government intervention in petrol pricing continues as Nigerians seek relief from rising living costs.
