The Nigerian National Petroleum Company Limited (NNPC Ltd.) has revealed that it supplies crude oil to Dangote Refinery in both naira and dollars. According to Group Chief Executive Officer, Bayo Ojulari, the company is sustaining specific cargoes of crude oil supply to Dangote Refinery under the approved naira-for-crude arrangement. However, additional crude volumes are supplied in dollars.
Ojulari explained that the dollar-denominated transactions are necessary because most of NNPC's financial obligations, including payments to drilling contractors, project contractors, and operators, are in dollars. He stated that it would be impractical to receive naira and then convert it to dollars to meet these obligations. The NNPC GMD emphasized that the company would continue to honour the Federal Government-approved Naira-for-crude arrangement.
In addition to the naira-for-crude arrangement, Ojulari disclosed that the extra crude volumes available are supplied in dollars. He mentioned that the company has a commitment to supply crude in naira for a specific number of cargoes, but the additional volumes are only supplied in dollars. This move is aimed at meeting the company's financial obligations.
On crude theft and pipeline security, Ojulari reported that the combination of community-based surveillance, intervention, and security agencies has significantly improved the availability of major crude oil pipelines. He noted that pipeline availability, particularly on major export routes, has improved substantially from levels recorded in early 2024.
According to Ojulari, some producers are now reporting that they are able to deliver virtually all their production to terminals, indicating improved reliability across major pipeline networks. The reconciliation factor between crude produced by operators and volumes accounted for at terminals has also improved to the 90 per cent range, compared with between 10 per cent and 20 per cent previously.
Despite the progress made, Ojulari acknowledged that challenges remain on smaller internal pipelines and well-heads, particularly those located across difficult terrains. To address this, the NNPC GCEO said the company is deploying technologies, including fibre optics and high-technology well-head cages, to detect intruders and improve response to crude theft and pipeline breaches.
Ojulari emphasized that while detection has improved significantly, the speed of response remains an area requiring further attention, particularly for facilities located in remote areas. The company is shifting greater attention to smaller pipeline networks and thousands of well-heads across land, swamp, seasonal swamp, and shallow offshore terrains.
Key points
- NNPC supplies crude to Dangote Refinery in both naira and dollars.
- The company's dollar-denominated transactions are necessary to meet financial obligations.
- Pipeline availability has improved substantially due to community-based surveillance and security agencies.
