The Federal Government has declared that Nigeria’s current crude oil production capacity is inadequate to fully supply the Dangote Refinery and meet domestic refining demands.
Minister of Finance, Taiwo Oyedele, made the disclosure while featuring on Channels Television’s Politics Today on Friday. He explained that despite a daily production output of 1.8 million barrels, the government lacks the required volume of free crude to satisfy local refiners without relying on imports.
Addressing recent calls from opposition figures for a production subsidy to lower local fuel costs, Oyedele stated that such proposals are unworkable due to existing Production Sharing Contracts (PSCs) and Joint Venture (JV) agreements.
“So the people that are saying, ‘We’ll discount it, we’ll do the cost of production,’ don’t know what they’re talking about. We don’t have enough to service Dangote. Dangote imports crude. And I just want us to establish that fact,” Oyedele stated.
The minister clarified that the 1.8 million barrels produced daily do not belong exclusively to Nigeria, and that joint venture agreements, royalties, and production costs heavily deplete the daily barrel output of the country. He added that after applying a rough sharing ratio of 45 to 55 per cent and deducting operational costs and royalties, the actual quantity left for the government falls short of market demand.
“I don’t want to go into the technicalities, but the reality is that today we do not have up to 700,000 free crude to give anyone, including Dangote.”
He added that while President Bola Tinubu’s “Naira for Crude” initiative has provided some economic stability, the available volume remains insufficient.
Oyedele expressed optimism that ongoing efforts to ramp up national crude oil production will eventually allow domestic facilities to run entirely on Nigerian barrels, terminating the need for refined product imports.
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