KEY POINTS
• NNPC Ltd. says it is continuing to supply crude to Dangote Refinery under the Federal Government’s approved naira-for-crude arrangement.
• The company says additional crude volumes outside the agreed naira allocation are supplied in dollars because most of its financial obligations are dollar-denominated.
• NNPC says improved pipeline availability has raised the volume of crude reaching export terminals, although security challenges remain around smaller pipelines and well-heads.
MAIN STORY
The Nigerian National Petroleum Company Ltd. (NNPC Ltd.) says it is maintaining crude oil supplies to Dangote Refinery under the approved naira-for-crude arrangement while selling additional available volumes to the refinery in dollars.
NNPC Group Chief Executive Officer, Bayo Ojulari, disclosed this on Tuesday in Abuja during a briefing on the company’s 2025 Audited Financial Statements following its Annual General Meeting.
Ojulari said the company was meeting its obligation under the naira-for-crude arrangement by supplying a specified number of cargoes in naira. However, crude available beyond the agreed allocation is supplied in dollars.
He explained that the dollar transactions were necessary because a significant portion of NNPC’s obligations to drilling contractors, project contractors and operators were denominated in dollars.
The GCEO said the company would continue to comply with the government-approved arrangement while maintaining the dollar-based sales for additional crude volumes.
On crude production and evacuation, Ojulari said measures involving host communities, intervention programmes and security agencies had improved the availability of major crude oil pipelines.
He said the improvement was particularly significant on major export routes, which had recorded extremely low availability in early 2024, when some facilities were operating below 10 per cent of producers’ reported output.
The improved network reliability has enabled some producers to report that virtually all their production can now be delivered to terminals, he said.
Ojulari also disclosed that the reconciliation factor between crude produced by operators and volumes ultimately accounted for at terminals had risen to around 90 per cent. He contrasted this with previous levels of between 10 per cent and 20 per cent.
Despite the improvement on major routes, he said security and operational problems persisted across smaller internal pipelines and well-heads, particularly facilities located in difficult terrain.
NNPC is deploying technologies such as fibre optics and high-technology well-head cages to identify intrusions and strengthen its response to crude theft and pipeline breaches.
According to Ojulari, the ability to detect incidents has improved considerably, but response time remains a concern, especially where facilities are located in remote locations.
The company is therefore expanding its security and technology focus beyond major export pipelines to smaller networks and thousands of well-heads spread across land, swamp, seasonal swamp and shallow offshore environments.
THE ISSUES
- The continuation of the naira-for-crude arrangement provides Dangote Refinery with a defined volume of locally sourced crude in naira, while NNPC retains dollar sales for additional volumes to meet its own foreign currency obligations.
- Improved pipeline availability could increase the proportion of crude that reaches terminals and reduce losses between production and export points. NNPC’s reported improvement in reconciliation from as low as 10 per cent to 20 per cent previously to about 90 per cent indicates the scale of the change.
- Security efforts have made greater progress on major export routes than on smaller pipelines and well-heads. NNPC’s next challenge is extending the same level of protection and rapid response to dispersed facilities in difficult terrain.
WHAT’S BEING SAID
“Most of our commitments are in dollars, so there is no point receiving Naira and then going to buy dollars to meet those obligations.” — Bayo Ojulari, NNPC Ltd. Group Chief Executive Officer.
“We have a commitment for supplying crude in Naira for a specific number of cargoes, typically. But also, the extra crude that are available, we only supply in dollar.” — Bayo Ojulari, NNPC Ltd. Group Chief Executive Officer.
“We are looking at what additional technology we can put in place to support our operations in those areas.” — Bayo Ojulari, NNPC Ltd. Group Chief Executive Officer.
WHAT’S NEXT
NNPC says it will maintain the approved naira-for-crude supply arrangement while continuing to sell additional crude volumes in dollars. The company will also increase its focus on smaller pipeline networks and well-heads, using technology and security measures to improve detection and response to breaches.
BOTTOM LINE
NNPC says crude supply to Dangote Refinery under the naira-for-crude arrangement remains in place, while improvements in pipeline availability are increasing the volume of crude reaching terminals. The company’s remaining security challenge is protecting smaller networks and dispersed production facilities.
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