The Nigerian National Petroleum Company Limited (NNPC) has stopped importing refined petroleum products and is now sourcing fuel exclusively from local refineries, including the Dangote Petroleum Refinery.
NNPCL’s Group Chief Executive Officer (GCEO), Mele Kyari, made this announcement on Monday during the ongoing conference of the Nigerian Association of Petroleum Explorationists (NAPE), held in Lagos. The conference is themed ‘Resolving the Nigerian Energy Trilemma: Energy Security, Sustainable Growth and Affordability.’
Kyari stated that the NNPC, as of today, is not importing any fuel, emphasizing that the company now buys all its refined products from domestic refineries. “Today, NNPC does not import any product, we are taking only from domestic refineries,” he revealed.
The NNPCL boss further debunked the allegations that the NNPC was sabotaging the Dangote refinery’s operations. “The point is very far from it and I’m going to speak to it straight. We are very proud part-owners of Dangote refinery, no doubt about it. We saw an opportunity that there is a clear market for at least 300,000 barrels of our production; we know that as time moves on, people will start struggling to find markets for their production,” Kyari said.
He added that the NNPC’s investment in Dangote Refinery is a business decision to secure supply for the domestic market. “Therefore, from day one, we knew that it is to our benefit to supply crude oil to the domestic refinery, so we don’t need to be persuaded; we don’t need anyone to talk to us, there is no need for any pressure from the streets for us to do this. We are already doing this,” Kyari clarified.
On the issue of pricing, Kyari explained the challenges of processing Nigerian crude in the country due to its high quality. “We should never forget that Nigerian crude is ‘Lamborghini crude’, if we choose that every product that we have in this country must come from domestic production, then we must deal with pricing. Otherwise, out there in the global market, everybody buys Nigerian crude and blends it with dirtier crude to process, a lot of you will confirm this,” he said.
He continued, “So, no one takes Nigerian crude except one or two refineries that I know. Straight processing of Nigerian crude, nobody does this, because you do have a gap in value if you do this. Therefore, as a country, and I believe this strongly also, that we must process all the crude that we produce in the country to the optimum. You can do intermediate products and sell to the market, you are still adding value.”
Kyari stressed the need for the country to domesticate its oil production, even though the products may be expensive. “You don’t have to sell gasoline that is coming from Nigerian production. You can do something different so you can process it domestically, but it’s going to be high quality. As we all know and it’s very clear in the media that we are selling high-quality products, that’s very true but you need not do this. You are driving a Keke-Napep and you want Lamborghini fuel, you do not need it,” he said.
READ ALSO: NNPCL Not Sabotaging Domestic Refineries — Kyari Insist
Kyari also addressed the concerns surrounding NNPCL‘s refusal to sell crude oil to Dangote Refinery in naira, calling it a form of sabotage. “There are too many claimants out there, that the NNPC does not want to sell crude to the refinery in naira as a form of sabotage. Far from it! It makes no difference to us because if you sell crude to the domestic refinery in naira and you buy the product in naira from the domestic refinery, it’s a net zero gain. You lose nothing, you probably gain nothing,” Kyari clarified.
He added, “Otherwise, whatever you do, you still have to source foreign exchange to import if you have to import. So, if you stop the import and sell in naira, what you are simply doing is just a substitution. It’s a settlement platform and we must commend the President for bringing this initiative.”
Kyari highlighted the potential benefits of this initiative in curbing foreign exchange pressure. “What it will do to our country is that the biggest source of FX pressure in our country is the import of PMS. It’s the highest value. That means if you can take that under control, it means that speculation around the naira to the extent of those FX that is required for domestic product supply will be eliminated.
That means speculation will go, you would have controlled inflation, and you would have controlled the FX pressure because you would have settled the exchange rate for 50 percent of your imports. This is a very great initiative. I should commend the President for bringing this initiative,” he said.
Kyari also pointed out that Nigeria does not have energy security at the moment.
“Today, when we say energy security, the thing that comes quickly to people’s mind is the availability of PMS, I think energy security is not about PMS. It’s beyond this. As a country today, we all know that over 50 percent of our population doesn’t have access to electricity. Over 70 percent of our population doesn’t have access to clean, good fuel. This is very true, all of us have said it over and over in the last three to five years,” he remarked.
He also noted that the oil and gas industry was not originally structured to provide domestic energy.
“Every investor here, and of course the landscape is changing, don’t mind the fact that things are changing, but every investor here is here to produce oil or gas, export and make money. This is the reality. We as NNPC are left with the cross of making sure that this is made domestically available,” Kyari stated.
Kyari revealed that NNPCL has settled its longstanding $2.4 billion cash-call debt owed to international oil companies.
“We no longer owe any dues, and this is a milestone achieved following the total removal of subsidies. The cash calls debts are funding requests by NNPC and its joint venture partners, Mobil, Chevron, Shell, TotalEnergies, and Agip to cover capital and operational expenses for oil projects,” he confirmed.
He expressed his gratitude to President Tinubu for removing fuel subsidies, acknowledging that while it might cause temporary financial strain, it will encourage more efficient energy use.
“As professionals, just know that PMS is a major distraction to the upstream, we transfer all our resources, and cash flow to ensure that it survives and is sustained. That’s why sometimes we default in our cash flows, it is because of the distraction this has caused NNPC as a partner,” he explained.
Kyari concluded by announcing plans to set up 12 Compressed Natural Gas (CNG) mother stations by the first quarter of 2025.
“By quarter one of 2025, there will be at least 12 mother stations that will be available for CNG, and not only that, we are also building a mini Liquefied Natural Gas plant that will deliver gas into the market and also sustain the quality of CNG delivery and make gas available to mini power plants across this industry in the short term,” he said.
