mORGANABLE business/Markets
According to the document, the refinery has access to crude volumes of up to 350,000 barrels per day through its agreement with NNPC under the Domestic Crude Supply Obligation framework, although actual supply remains subject to availability.
KaNo —
Nigeria’s largest refinery project, the Dangote Petroleum Refinery, sourced about 60 per cent of its crude oil feedstock locally over a 12-month period, according to details contained in its initial public offering prospectus, providing fresh insight into its supply strategy amid ongoing concerns about domestic crude availability.
The disclosure showed that the refinery obtained an estimated 116 million barrels of crude oil from Nigerian sources between July 2025 and June 30, 2026.
Supplies were drawn from the Nigerian National Petroleum Company Limited, international oil companies operating in the country, as well as domestic producers.
The figures were derived from the refinery’s processing data, which indicated that it handled approximately 26.4 million metric tonnes of crude during the review period.
Using a standard industry conversion factor of 7.33 barrels per metric tonne, the processed volume translates to about 193.5 million barrels.
60% Stock Sourced Locally
Despite providing the aggregate figure, the company did not break down the exact contributions from NNPC, international oil companies, or indigenous producers, leaving some uncertainty about the relative weight of each supplier category in meeting the refinery’s domestic crude needs.
The prospectus noted that the refinery relies on a mix of term contracts and spot purchases to secure its crude supply.
A significant portion of its domestic sourcing is tied to agreements with NNPC, including participation in the Federal Government’s crude-for-naira programme.
Under this arrangement, eligible crude purchases can be settled in local currency, thereby reducing the refinery’s exposure to foreign exchange pressures.
According to the document, the refinery has access to crude volumes of up to 350,000 barrels per day through its agreement with NNPC under the Domestic Crude Supply Obligation framework, although actual supply remains subject to availability.
Industry observers have closely monitored the refinery’s crude sourcing model, particularly given longstanding challenges in Nigeria’s oil sector, including pipeline vandalism, theft, and fluctuating production levels.
40% Crude Sourced Internationally
Indeed, the prospectus confirmed that the remaining 40 per cent of the refinery’s crude requirements were sourced from international markets.
These include purchases on the spot market as well as supply agreements with foreign counterparties.
The company said this dual sourcing strategy allows it to maintain operational flexibility and respond to changing market conditions.
By drawing from both domestic and international sources, the refinery can select crude grades based on economic considerations rather than availability alone.
“The procurement model enables the refinery to source crude oil of multiple domestic and international origins and to select from a broad range of crude grades based on prevailing market conditions and refinery economics,” the prospectus stated.
As of June 30, 2026, the refinery had processed 36 different crude grades sourced from regions including Africa, South America, the United States, and the Middle East. However, the company did not specify the individual countries of origin.
Central to its sourcing decisions is a proprietary linear programming model used by its economics and planning team.
The model evaluates the expected refining margin for each crude grade by analysing factors such as product yield, operational constraints, and global product prices.
This approach enables the refinery to determine the economic value of each crude type and negotiate supply terms accordingly.
In some cases, the refinery may pay a premium for certain grades if they are expected to deliver higher refining margins, while less efficient grades may be acquired at discounted prices.
The company said this flexibility supports diversification and reduces dependence on any single supplier or supply route, a critical factor in an industry often affected by geopolitical and operational risks.
In terms of logistics, the refinery does not rely on dedicated upstream pipeline connections to oilfields.
This arrangement is designed to limit exposure to disruptions in pipeline networks, which have historically affected crude deliveries in Nigeria.
The prospectus also highlighted that about 60 per cent of the refinery’s feedstock in 2025 was sourced domestically, indicating consistency in its sourcing pattern over time.
The crude was largely received through marine infrastructure, reinforcing the refinery’s emphasis on flexible delivery mechanisms.
Despite its diversified sourcing strategy, the refinery cautioned that its supply arrangements do not guarantee uninterrupted access to crude oil.
Dangote Refinery Reveals Crude Access Challenges
It identified several potential risks, including supplier defaults, operational issues at upstream facilities, geopolitical restrictions by oil-producing nations, and security challenges in the Niger Delta.
“There can be no assurance that such arrangements will ensure uninterrupted supply of crude oil to the refinery,” the company stated, warning investors of possible disruptions that could affect operations.
The refinery also noted that it may be forced to adjust its crude mix if preferred grades become unavailable.
Analysts say these risks underscore the importance of strengthening Nigeria’s upstream sector to ensure consistent crude supply for domestic refining.
While the Dangote refinery represents a major step toward reducing the country’s dependence on imported petroleum products, its success is partly tied to the stability and reliability of crude production.
The company further warned that inadequate or expensive crude supplies could have direct financial implications.
Operating below design capacity due to supply constraints could lead to reduced throughput, higher per-unit production costs, and lower profit margins.
“If the refinery is unable to secure adequate volumes of crude oil at competitive prices, this could lead to reduced throughput and increased production costs,” the prospectus noted.
The disclosure comes at a time when stakeholders in Nigeria’s oil and gas sector are paying close attention to the refinery’s performance, particularly following its entry into the domestic fuel market and its broader implications for energy security.
While the refinery’s reliance on both domestic and international crude sources reflects a pragmatic approach to supply management, it also highlights ongoing structural challenges in Nigeria’s oil industry, even as the country seeks to maximise the benefits of its refining capacity.
