Dangote Refinery Buys Crude at Benchmark Rates Despite Crude-for-Naira — CEO

The Chief Executive Officer of the Dangote Refinery, David Bird, has clarified that the facility purchases Nigerian crude at international benchmark prices, despite the Federal Government’s crude-for-naira initiative.

Bird made the disclosure during a media briefing in Lagos on Monday, noting that the refinery does not benefit from discounted crude and remains fully exposed to global market dynamics.

He emphasized that the refinery will continue to meet Nigeria’s fuel needs even amid volatility in international oil markets.

What they are saying

Bird reiterated that the crude-for-naira framework does not imply preferential pricing for the refinery, as Nigerian crude supplied to the facility is still sold at prevailing global benchmark rates.

• “Even under the crude-for-naira arrangement, Nigerian crude is purchased at international benchmark prices, meaning the refinery does not receive discounted crude.”  
• “Import-dependent countries are worst hit as the global oil crisis escalates.”  
• “Global oil markets are experiencing extreme volatility, with crude prices rising from the mid-$60 range to nearly $120 per barrel within a week.”  

He also highlighted that the refinery’s costs are influenced by international factors such as crude oil prices, shipping, insurance, and financing.

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Bird provided further details on rising logistics costs, noting the surge in tanker freight rates in recent weeks.

• “Freight costs have surged dramatically, with tanker costs rising from about $800,000 to roughly $3.5 million per shipment in the current market environment.”  
• “The refinery is fully exposed to international commodity markets, including crude oil prices, freight rates, insurance, and financing costs.”  

Despite these pressures, the Dangote Refinery continues to operate at full capacity.

• “Dangote Refinery operates at its full nameplate capacity of about 650,000 barrels per day, with potential to increase production to around 700,000 barrels per day.”  

Industry observers say the refinery’s scale could significantly strengthen Nigeria’s energy security by reducing dependence on imported petroleum products and shielding the economy from global supply disruptions.

• Owned by African industrialist Aliko Dangote, the Dangote Refinery is considered one of the largest single-train refining facilities in the world.
• It is positioned to transform Nigeria’s downstream petroleum sector by supplying refined products domestically.
• In 2024, the Federal Executive Council (FEC) approved the Naira-for-Crude initiative, aiming to supply local refineries with crude in Naira instead of dollars to stabilize fuel prices and the dollar-Naira exchange rate.