Aliko Dangote Calls for End to Mortgaging Nigeria’s Crude Oil

Aliko Dangote, President of the Dangote Group, has urged Nigeria to cease mortgaging its crude oil reserves, warning that the nation is depleting its future wealth. Speaking at a summit hosted by the Crude Oil Refinery Owners Association of Nigeria in Lagos, Dangote decried the practice of using oil resources to secure loans, contrasting Nigeria’s actions with countries like Norway that invest their oil revenues into national wealth funds.

“It is unfortunate that while countries like Norway are putting oil proceeds into a future fund through their national wealth funds, here in Africa we are spending oil proceeds from the future today,” he remarked.

Dangote’s comments come against the backdrop of reports that the Nigerian National Petroleum Company Limited (NNPC) has pledged 272,500 barrels of crude oil per day through a series of crude-for-loan agreements, amounting to $8.86 billion. According to the Nigeria Extractive Industries Transparency Initiative, this commitment involves approximately 8.17 million barrels of crude each month being used to service various loans.

At the summit, Dangote, represented by Group Executive Director Mansur Ahmed, stressed the need for Nigeria to prioritise domestic crude supply to ensure that local refineries, including the 650,000 barrels per day Dangote refinery, have sufficient feedstock. “We will need to expand crude production capacity to support demand from the refinery,” he stated.

He also disclosed that the Dangote refinery was constructed without any government incentives. However, Dangote called on the government to create incentives for investors if Nigeria is to become a regional refining hub. He warned that Africa’s dependency on imported petroleum products, combined with tightening environmental regulations in Europe, presents both a challenge and an opportunity for the continent to increase its refining capacity.

“Europe is tightening environmental standards, and Holland and Belgium have banned exports of low-quality petroleum products that used to be sent to Africa,” Dangote noted. He cited reports indicating that several refineries across Europe and China, with a combined capacity of 3.6 million barrels per day, are expected to shut down in the coming years.

This comes as the Nigerian government designated the Dangote refinery as the exclusive supplier of jet fuel (Jet A1) for Nigerian airlines. Aviation Minister Festus Keyamo revealed that the move aims to shield airlines from the volatility of international oil prices by allowing them to source fuel domestically in naira.

“You can see that we started the naira-for-crude purchase with Dangote. It’s all naira, no dollar component,” Keyamo said in an interview. He emphasised that the decision would help reduce operational expenses for Nigerian airlines by ensuring a stable supply of fuel at a lower cost.

With Africa currently importing around 3 million barrels of petroleum products per day, Dangote warned that addressing the continent’s refining capacity deficit would not be easy, but strong government support and collaboration with stakeholders would be key. “To seize this opportunity, we will need to build an additional 1.5 million barrels per day of refining capacity,” he concluded.