Nigeria says its crude is available. Why is Dangote still looking abroad?

Nigeria’s upstream regulator has challenged the central claim in the long-running dispute over crude supplies to the Dangote refinery that Nigerian producers are failing to supply enough oil to domestic plants.

According to Oritsemeyiwa Eyesan, chief executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), the real problem is less about availability than about price. Producers are offering crude, she argues, but refiners are often unwilling to pay the international market price for Nigeria’s premium grades.

The commission’s latest data gives fresh weight to that argument. In the second quarter of 2026, crude deliveries to local refineries surged by 88% to 53.7 million barrels (up from 28.5 million barrels in Q1), achieving a 97.4% compliance rate against the allocated 55.1 million barrels.

For the Dangote refinery, which accounted for 98% of all domestic crude allocations, producers offered 68.1 million barrels in Q2, comfortably surpassing the refinery’s declared quarterly requirement of 63 million barrels.

Improved overall delivery rate

However, Dangote ultimately accepted 52.6 million barrels, roughly 78% of the offered volume. The NUPRC attributed the improved overall delivery rate to higher national oil production and the execution of bankable long-term Sales and Purchase Agreements (SPAs), but noted that commercial, quality, and logistical terms under the willing buyer, willing seller regime still leave a gap between what is offered and what refiners actually take.

“Most of our crude grades are premium grades,” Eyesan said in an interview with The Africa Report in May. “The temptation is that you want to get the cheapest quality to your refinery, but you don’t want to pay the price of premium quality.”

The refinery, however, strongly rejects the regulator’s characterisation.

“Our position is simple: we are willing and committed to buying Nigerian crude, but it must be available in sufficient quantity, the right grade and at a commercially competitive price,” said a Dangote Refinery spokesperson in an emailed response to questions on 11 August.

Dangote argues that headline numbers do not tell the full story, describing many of the crude offers reported by the regulator as merely symbolic.

“Many times the prices the cargoes are offered at are well above market,” the spokesperson said. “Other times, the cargoes are symbolically ‘offered’ to us and then sold to third parties” before negotiations even conclude.

The refinery pushed back against the claim that it simply prefers cheaper imported oil to local barrels, instead framing its decisions as basic commercial optimisation.

“This characterisation is not correct. We prefer Nigerian crude because of its proximity to the refinery, shorter voyage distances, logistics advantages and our commitment to supporting a sustainable market for Nigerian crude. However, we must buy crude at a fair and commercially competitive value. Where Nigerian crude grades are priced above their market value, a comparable imported grade may offer better economics.”

Domestic Crude Supply Obligation prices

According to the refinery, prices offered under the Domestic Crude Supply Obligation (DCSO) consistently sit above international pricing benchmarks (such as Platts or Argus) as well as the official prices used for royalty computations. The refinery noted extreme examples, alleging that during peak international supply disruptions, international trading arms offered Nigerian cargoes with an added premium of almost $30 per barrel.

The dispute also centres on long-term planning and contractual arrangements.

Eyesan argues that Dangote’s supply difficulties are partly contractual. Refineries would normally secure firm sales and purchase agreements before they reach commissioning. These guarantee a minimum stream of crude rather than leaving the plant dependent on spot purchases or administrative allocations.

Dangote, she said, had a supply arrangement with NNPC arising from the state company’s financial investment in the refinery, but did not secure enough separate SPAs with other Nigerian producers.

“In his own case, apart from NNPC, because of the financial arrangement he had with NNPC, he didn’t have another SPA with the industry,” Eyesan says, adding that Dangote was now working to sign confirmed agreements following regulatory intervention.

Dangote counters that this view misunderstands the operational reality of commissioning a massive plant.

“Anyone who understands modern refining will know that you don’t enter into long-term supply contracts at the time of commissioning,” the spokesperson explained. “Rather, you experiment with different crude grades over time and understand what works. It is only after stabilising the refinery that you begin to increase the proportion of term contracts.”

Furthermore, Dangote pointed out that its foundational agreement with NNPC, intended to provide 11 to 13 million barrels monthly (around 60% of the requirement), has routinely underdelivered.

“Unfortunately, the volumes expected under this arrangement have not consistently materialised… we are getting less than 50% on average as their crude cargoes have been committed to various financing arrangements,” the spokesperson said. Excluding NNPC’s term contracts, Dangote claims that from the inception of the DCSO to date, it has successfully negotiated fewer than 20 cargoes directly under the scheme.

‘Non-value-adding middlemen’

The refinery also pointed to structural issues within the supply chain, particularly the involvement of third-party traders.

Under the Petroleum Industry Act (PIA), DCSO was intended to facilitate direct supply from producers to refiners. Instead, Dangote claims several IOCs refused to deal directly with the plant for nearly a year, forcing them to negotiate through international trading divisions that act as “non-value-adding middlemen” and drive up acquisition costs.

This is compounded by high domestic freight costs and loading deferments. The refinery’s managing director, David Bird, noted previously that moving crude from Nigerian offshore terminals to the Lagos plant remains expensive, as barrels must still be loaded onto tankers, shipped around the coast, and discharged via offshore moorings.

The distinction between crude being “offered” and being dependably available at commercially workable terms is therefore important. An offer may not translate into a delivery if the parties disagree over the grade, pricing formula, loading date, credit terms or transport costs.

NUPRC’s figures nevertheless complicate the picture of a refinery starved of Nigerian oil. They suggest that the domestic crude obligation is not simply being ignored. Instead, producers and refiners are struggling to agree on who should bear the cost of keeping Nigerian barrels at home.

Dangote’s technical sophistication gives it the ability to process almost any suitable crude. Its challenge is that this also gives it little commercial reason to pay a patriotic premium for Nigerian oil. (The Africa Report)