NNPC Signs 10-Year Gas Sale Agreement with Dangote Refinery to Boost Nigeria’s Energy Sector
In a major step toward achieving energy self-sufficiency in Nigeria, the Nigerian National Petroleum Corporation (NNPC) has signed a landmark 10-year gas sale agreement with the Dangote Refinery. Announced on November 13, 2024, this collaboration underscores a shared commitment to leveraging Nigeria’s abundant natural gas resources to drive industrial growth and economic development.
A Strategic Partnership for Energy Independence
Under the agreement, NNPC Gas Marketing Limited, a subsidiary of NNPC, will supply 100 million standard cubic feet of natural gas daily to the Dangote Refinery. This gas will be used both for power generation and as a critical raw material, ensuring the uninterrupted operation of the $20 billion refinery located in Lagos.
The deal is part of a broader strategy by NNPC to promote domestic gas utilization while contributing to the operational success of the Dangote Refinery, which began producing jet fuel and naphtha earlier this year and started petrol production in September 2024.
Expanding Refinery Capacity
The Dangote Refinery, one of the largest in the world, currently operates at a capacity of 420,000 barrels per day (bpd). However, the refinery is ramping up production with the goal of reaching its full capacity of 650,000 bpd by the second quarter of 2025. When operating at maximum capacity, it is expected to meet Nigeria’s entire petrol demand of 30-35 million liters daily, significantly reducing the country’s reliance on costly fuel imports.
Economic and Industrial Impact
This agreement aligns with President Bola Tinubu’s policy to maximize the utilization of Nigeria’s vast gas resources as a catalyst for industrial growth. By ensuring a steady supply of natural gas, the partnership will not only stabilize refinery operations but also create a ripple effect across various industries dependent on energy.
The financial terms of the agreement were not disclosed, but the deal includes provisions for renewal and the possibility of additional supply volumes, highlighting the long-term vision of both parties.
Addressing Challenges and Concerns
While this development is a positive step forward, challenges remain. Ensuring a reliable supply of crude oil for the refinery and addressing the effects of Nigeria’s currency devaluation are pressing issues. Dangote’s agreement with NNPC to pay for crude in naira has raised concerns about the NNPC’s ability to meet its obligations amidst existing forward contract commitments.
Critics have also voiced concerns about Dangote’s growing influence in Nigeria’s industrial sector. However, supporters argue that the refinery’s success will create jobs, reduce fuel costs, and enhance Nigeria’s position in the global energy market.
The Future of Nigeria’s Energy Landscape
The Dangote Refinery is a beacon of hope for Nigeria’s energy sector, offering a viable pathway to energy independence and economic diversification. The partnership with NNPC marks a critical step toward transforming Nigeria into an energy hub for Africa.
With this agreement, the Dangote Refinery is well-positioned to play a pivotal role in the nation’s journey toward industrial and economic growth, benefiting millions of Nigerians through job creation, stable fuel supply, and reduced import costs.
For more updates on Nigeria’s evolving energy sector and investment opportunities, visit Naija Investing Hub.
