Nigeria’s government has acknowledged that the country cannot currently supply the full crude oil requirements of the Dangote refinery, highlighting a major challenge as Africa’s largest refining complex prepares to double its processing capacity to 1.4 million barrels per day.
Finance Minister Taiwo Oyedele said Nigeria does not have sufficient freely available crude to meet the refinery’s current requirements, despite the country being Africa’s leading oil producer. Speaking on Channels Television’s Politics Today programme on 9 October, Oyedele explained that production-sharing contracts, operating costs and existing commitments limit the volume of crude available to the government.
“We don’t have enough to service Dangote,” Oyedele said.
The refinery currently has crude-distillation capacity of 700,000 barrels per day. Although Nigeria produces substantial quantities of oil, not all production belongs to the government or is available for allocation to domestic refiners.
Under production-sharing agreements and joint ventures, crude is distributed between the state and commercial partners, with production costs and other contractual obligations accounted for before the government determines its available share.
Oyedele said previous borrowing arrangements secured against future oil production had further constrained supplies. The government has renegotiated some commitments and taken steps to reduce oil theft in an effort to free up additional barrels, but available domestic allocations remain insufficient to meet all refining requirements.
Dangote’s refinery has therefore continued to source crude from international markets. Imports also serve a commercial purpose, as different crude grades offer varying processing characteristics and can help the refinery optimise its output. Oyedele noted that the facility would still require some heavier crude even if Nigeria could supply sufficient volumes of its domestic sweet crude.
The government has not disclosed the refinery’s precise supply shortfall or the volume of crude it can currently allocate.
Expansion increases supply pressure
Dangote’s planned expansion to 1.4 million barrels per day would significantly increase its demand for dependable crude supplies. The project is expected to strengthen the refinery’s role in supplying petroleum products to Nigeria and export markets across Africa.
The refinery has already demonstrated flexibility in its sourcing strategy. Company disclosures indicate that it had processed 36 crude grades from Africa, South America, the United States and the Middle East by 30 June 2026.
However, the company has also warned that supply arrangements cannot guarantee uninterrupted deliveries, making crude availability an important consideration for its operations and expansion plans.
Nigeria introduced a domestic-currency crude sales arrangement in October 2024 to support local refining and ease pressure on foreign-exchange reserves. According to Oyedele, the initiative has improved stability, but changing payment arrangements cannot resolve the underlying shortage of available crude.
The supply challenge highlights a key distinction in Nigeria’s oil industry: increasing national production does not automatically guarantee that sufficient crude will be available to domestic refineries. The government must also address contractual obligations, oil-sector costs and the allocation of production.
As the Dangote refinery pursues its expansion, securing reliable supplies from both domestic and international producers will remain critical to sustaining operations and meeting growing demand for refined petroleum products.