Nigerian National Petroleum Company, Crude Oil, Refined Petroleum Products, NEITI, Oil and Gas Report, Refineries, Domestic Market, DSDP Scheme, Fuel Shortages, Downstream Sector, Modular Refineries, Dangote Refinery The Nigerian National Petroleum Company Limited (NNPCL) engaged in the exchange of crude oil valued at N2.6tn for refined petroleum products in 2021, according to data from the Nigeria Extractive Industries Transparency Initiative (NEITI), a Federal Government agency. This report reveals that during this period, NNPCL did not supply any crude oil to Nigeria’s refineries, which have been largely inactive for several years. NEITI suggests that the non-supply of crude to domestic refineries might be due to their operational inactivity.
The NNPC implemented this exchange under its Direct Sale Direct Purchase (DSDP) program, wherein selected overseas refiners, trading companies, and indigenous firms received crude supplies in exchange for delivering an equivalent value of petrol and other refined products to the NNPCL. The DSDP program was initiated in 2016.
Despite allocating 98.92 million barrels of crude oil valued at $7.11bn (N2.73tn) for the local market in 2021, none of this crude reached domestic refineries due to their non-operational status. Instead, 95.25% of this crude was exchanged for products in the international market under the DSDP arrangement, while 4.75% was sold on the international market. This was partly attributed to the refineries’ inactivity in 2021.
Furthermore, the report highlights that the NNPCL lifted and exported 24.84 million barrels of crude oil valued at $1.70bn on behalf of the Federation in 2021. Of this amount, $1.58bn was traced to respective bank accounts as actual sales receipts in 2021, with $1.55bn representing sales receipts for the same year and $24.32m related to settling prior year receivables.
The downstream sector in Nigeria has been urging the Federal Government to revive domestic refineries, aiming to reduce pressure on the national currency, eliminate the need for the DSDP arrangement, and ensure a sustainable supply of refined petroleum products within the country. Operators emphasize the importance of functional modular refineries in securing Nigeria’s energy needs, particularly in the Niger Delta region, alongside large-scale refineries like the Dangote Refinery.
Despite the anticipation surrounding the Dangote Refinery, modular refineries are considered crucial for providing high-quality refined petroleum products to local markets across multiple sites in the Niger Delta, complementing the efforts of larger refineries and contributing to energy security.