The oil and gas sector’s demand for foreign exchange significantly increased in 2024, more than doubling its 2023 figures. This rise amounted to $1.23 billion (119 percent) year-on-year, despite reported decreases in fuel imports and ongoing efforts to boost domestic refining. This information comes from the Central Bank of Nigeria’s latest quarterly statistical bulletin.

A detailed look at the data shows that the sector used a total of $2.26 billion in foreign exchange in 2024, a substantial jump from the $1.03 billion recorded in 2023.

These figures highlight a considerable spike in foreign exchange requests. This occurred even as fuel import volumes were reportedly falling, a trend attributed to the gradual operation of the Dangote Refinery and the federal government’s initiative to reduce petroleum product imports.

However, a month-by-month analysis of the data revealed significant fluctuations in the sector’s demand throughout 2024. For instance, the year started with an unusually low utilization of $26.55 million in January. This marked a sharp 85 percent drop from the $173.88 million recorded in January 2023.

In February, demand rose steeply to $161.88m, up 509 per cent from January 2024, and also higher than the $137.67m used in February 2023. The upward trend continued into March, where utilisation peaked at $334.47m, representing a 107 per cent month-on-month increase from February, and a 120 per cent year-on-year increase from $151.75m in March 2023.

In April 2024, the amount fell to $106.48m, a 68 per cent decline from March and 19.6 per cent lower than April 2023, which recorded $132.36m.

Demand picked up again in May, rising to $150.45m—up 41.3 per cent from April, and 27.6 per cent higher than the $117.92m utilised in May 2023. A steep drop followed in June, with utilisation falling to $36.82m, representing a 75.5 per cent drop from May, and 59 per cent lower than June 2023’s $89.85m.

The second half of the year saw a sharp turnaround. In July 2024, the sector utilised $107.10m, more than doubling the $45.82m spent in July 2023.

August 2024 recorded $132.45m, in contrast to zero utilisation in August 2023. By September, the figure rose to $192.71m, up from $42.43m in the same month of the previous year, while October climbed slightly to $197.79m from $38.46m in October 2023.

In November, foreign exchange utilisation surged further to $289.21m, nearly six times higher than November 2023’s $51.95m. The most notable jump came in December 2024, when the oil sector recorded its highest monthly forex utilisation of $526.50m, an 82 per cent increase from November, and a tenfold rise compared to $52.14m spent in December 2023.

December alone accounted for 23.3 per cent of the sector’s total forex usage for the year. In total, the second half of 2024 (July to December) accounted for $1.45bn, representing 64 per cent of the sector’s annual total, and a 528 per cent increase compared to $230.8m recorded in the second half of 2023.

This surge occurred despite the introduction of the naira-for-crude oil policy aimed at easing pressure on the country’s foreign exchange reserves. The policy, which came into effect in October 2024, was designed to allow local refineries, particularly the Dangote Refinery, to purchase crude oil in naira rather than dollars.

Under the arrangement, the Nigerian National Petroleum Company Limited agreed to supply crude to domestic refiners in exchange for naira payments, a move seen as part of efforts to strengthen the local currency and reduce dependence on the dollar.

Speaking at the eighth edition of the Nigeria International Energy Summit, which opened in Abuja earlier this year, President Bola Tinubu said the introduction of the sale of crude oil in Naira was a strategic move to enhance the operational efficiency of local refineries by reducing foreign exchange risks and transaction costs.

However, the policy has faced implementation setbacks, and its impact appears limited in curbing forex demand from the oil sector. In March 2025, the Dangote Refinery reportedly suspended naira-denominated fuel sales, citing challenges related to dollar obligations for crude oil procurement.

This temporary suspension raised concerns about the feasibility of the initiative and may have led to a resurgence in dollar-based transactions across the sector. Market watchers had said that the stalled talks over the naira-for-crude deal between the NNPC and Dangote refineries could threaten liquidity in the foreign exchange market and affect the deceleration of inflation.

In April 2025, the Federal Government reaffirmed its commitment to the naira-for-crude policy, with directives issued for its full and indefinite implementation.

Decline In Oil Imports

Nigeria’s official oil imports fell by nearly a quarter in 2024, despite a sharp rise in foreign exchange utilisation by the oil sector during the same period, raising questions about the underlying drivers of dollar demand in the industry.

According to data from the CBN, oil imports, measured on a Cost, Insurance, and Freight basis, declined by 23.3 per cent to $14.75bn in 2024, down from $19.23bn recorded in 2023.

This is in contrast with foreign exchange utilisation by the oil sector, which surged by 119 per cent year-on-year, from $1.03bn in 2023 to $2.26bn in 2024. A closer examination of the monthly oil import data reveals a persistent decline across most months in 2024, with only a few periods of mild recovery.

In January 2024, oil imports stood at $1.38bn, down 40.7 per cent from $2.33bn in January 2023. February showed an uptick to $1.71bn, still short of the $1.87bn recorded in the same month of 2023.

The trend softened in March, with oil imports of $1.50bn, representing a 32.2 per cent year-on-year drop from $2.21bn in March 2023. The value of oil imports in April 2024 was $1.53bn, marginally below the $1.97bn posted in April 2023, while May 2024 recorded $1.59bn, which was lower than May 2023’s $1.63bn.

June witnessed a steep decline to $844.03m, a 3 per cent fall from the $870.18m recorded in June 2023, and the lowest monthly figure at that point in the year. The downward trajectory persisted in July, with oil imports dropping to $1.07bn compared to $1.22bn a year earlier.

In August, the country imported $1.59bn worth of oil, slightly below the $1.71bn recorded in August 2023. September 2024 marked one of the sharpest declines, with oil imports falling to $741.63m, down 51 per cent from $1.51bn in September 2023.

Though there was a modest rebound in October 2024 to $878.03m, this still fell short of $1.68bn in October 2023. November 2024 registered oil imports of $1.22bn, compared with $1.38bn in the same period the previous year.

The year ended on a particularly weak note, with December 2024 oil imports of just $683.97m, representing a 19.7 per cent drop from $851.43m in December 2023. Altogether, the oil import total for 2024 reached $14.75bn, down from $19.23bn in 2023, confirming a full-year contraction of $4.48bn or 23.3 per cent.

The decline aligns with policy direction to reduce petroleum product imports following the deregulation of petrol pricing and the phased operationalisation of the Dangote Refinery. However, the drop in oil import value did not translate to lower foreign exchange demand from the sector

Meanwhile, non-oil imports also declined, though at a slower pace. Non-oil imports fell from $30.81bn in 2023 to $26.98bn in 2024, representing a decline of 12.4 per cent. Similarly, Informal Cross-Border Trade dropped from $2.22bn to $1.98bn, a reduction of 11 per cent.

Overall, total imports (CIF basis) stood at $43.71bn in 2024, down from $52.27bn in 2023—a decline of $8.56bn or 16.4 per cent. On a Free on Board (FOB) basis, which excludes insurance and freight costs, oil imports also dropped by 23.2 per cent from $18.31bn in 2023 to $14.06bn in 2024.

This consistent pattern between CIF and FOB data confirms that the reduction in oil import value was not driven by lower shipping and insurance costs but by actual volume or value contraction.

FX Pressure

An oil and gas expert, Olatide Jeremiah, linked the persistent surge in dollar demand to the activities of the downstream petroleum sector, particularly the continued importation of refined products and crude oil by private refineries.

Speaking with our correspondent, Jeremiah said imported fuel still accounts for nearly half of Nigeria’s estimated 50 million litres daily fuel consumption. “The importation of refined products makes up about 50 per cent of daily consumption, and that’s a major source of FX pressure,” he noted.

He added that the Dangote Refinery, despite having a production capacity of between 350,000 and 450,000 barrels per day, receives less than 150,000 BPD from local suppliers under the CBN’s naira-for-crude policy.

As a result, the refinery supplements its feedstock by importing an average of four crude tanker vessels weekly, amounting to over 70 per cent of its total intake. Jeremiah warned that the rising reliance on imported crude, paid for in dollars, is exacerbating pressure on the naira.

“Imported crude is the only way to augment his production capacity, and it in turn weakens our naira and strengthens the dollar,” he said.

Credit: The Punch

Marketers of refined petroleum products say petrol and diesel prices may drop as crude oil prices slump again.

However, the marketers who spoke with our correspondent, said the drop may not be immediate, saying it has to do with the stability of the new low prices.

It was gathered that crude prices tumbled below $60 per barrel over the weekend. The prices hovered around $65 as of Friday.

However, on Monday, the benchmark Brent was trading at $59.80 per barrel, while the West Texas Intermediate traded around $56.71 a barrel, according to oilprice.com

Nigeria’s Brass River and Qua Iboe stood at $64.60 per barrel. The prices were over $10 below the proposed $75 in the 2025 budget revenue projection. This has also triggered fears about the feasibility of the 2025 budget.

As the fall in crude prices impacts the Federal Government’s revenue negatively, Nigerians are hopeful that this may translate to cheaper fuel at the pumps. Crude oil prices and the foreign exchange rate are the major determinants of refined product prices.

Speaking (in an interview with The Punch), marketers said the prices of petroleum products may come down, but not immediately.

The National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria, Chinedu Ukadike, said oil speculators will look at the cause of the price crash and how stable it will be.

“The price of petrol may come down, but it might not be soon. Oil speculators will look at the stability first and the factors that brought the price down. So, if the factors are natural, they will not look at bringing down the price. If it is an artificial factor that can definitely be ratified, they will also leave it and watch.

“So, I think for now, to enjoy stability, they will look at it and leave it this way. Maybe by the next two weeks, if it continues like this, there will be a reduction in refined petroleum products,” Ukadike stated.

Similarly, the President of the Petroleum Products Retail Outlet Owners Association of Nigeria, Billy Gillis-Harry, explained that some refineries had bought crude before the prices went down.

“Some of these things are the input values that should be able to create a low and high, but it doesn’t take just that same speed to impact the system because there’s always crude feed that has been there before, either it’s a higher price or a lower price.

“But if it’s a lower price, sometimes it’s easy to think it’s better to increase the price now so that you can have money to buy more crude. But the projection will always be that once there is a price fluctuation, it will naturally affect the input cost, and therefore also affect the output prices that will be sold from the retail outlets. So, we should expect such a response.

“But it will not be as fast as Nigeria expects it to be. There are still processes that it will go through,” Gillis-Harry stated.

According to Reuters, oil prices fell by more than $1 a barrel on Monday after OPEC+ decided to accelerate its output hikes, causing concerns about more supply coming into a market clouded by an uncertain demand outlook.

The contracts opened on Monday at their lowest levels since April 9.

Reuters said those moves compounded losses after Brent shed 8.3 per cent and WTI lost 7.5 per cent last week on rising supply concerns after Saudi Arabia signaled it could cope with a prolonged lower price environment.

That offset optimism on the demand side that US-China tariff talks could occur, Saxo Bank analyst Ole Hansen said.

OPEC+ agreed on Saturday to further speed up oil production hikes for a second consecutive month, raising output in June by 411,000 barrels per day.

The June increase by eight participants in the OPEC+ group, which includes non-OPEC member allies like Russia, will take the total combined hikes for April, May, and June to 960,000 bpd, representing a 44 per cent unwinding of the 2.2 million bpd of various cuts agreed on since 2022, according to Reuters calculations.

The President of Dangote Group, Alhaji Aliko Dangote, says he is still fighting for the survival of his $20bn refinery, stressing that “the fight is not yet finished.”

Dangote expressed optimism that he would win the fight for the refinery, stating his determination to fight on.

According to Semafor, an international news medium, Africa’s richest man spoke at an investor forum in Lagos on Friday.

The report stated that Dangote pointed out that some individuals who “for a very, very long time” have “made a lot of money from” government-subsidised oil imports into Nigeria, were the ones trying to sabotage the 650,000 barrels per day oil refinery situated in Lekki, Lagos.

Dangote was quoted as saying that “those groups have funded resistance to the Bola Tinubu government’s removal of petrol subsidies and are opposed to the refinery operating easily in the country.”

However, Dangote was confident that the battle between him and the groups would be won, priding himself as a long-time fighter.

“We’re fighting, and the fight is not yet finished. But I have been fighting all my life, and I am ready and 100 per cent sure I will win at the end of the day,” he was quoted.

Dangote’s latest comments came as Nigeria plans to increase its capacity to stockpile petroleum products, to prepare against shocks to the global oil market following US President Donald Trump’s shake-up of international trade with the threat of tariffs.

Recall that Dangote has since last year raised the alarm that some mafias were sabotaging his refinery.

He specifically mentioned that some international oil companies were sabotaging his investment by denying the facility adequate crude supply despite the domestic crude supply obligation.

Dangote had alleged that the Nigerian Midstream and Downstream Petroleum Regulatory Authority was issuing licences to marketers to import substandard petroleum products into the country.

He vowed to push his $20bn refinery to full operational capacity despite what he said were challenges from oil importers seeking to undermine his venture to retain their dominance in the country’s energy sector.

At a point last year, Dangote said he regretted building the refinery, saying the mafias in the oil and gas sector were stronger than those of drugs.

However, he refused to give up on the project as the facility targets its full capacity soon.

Recall that the Dangote Group boss once accused some powerful individuals of frustrating his refinery.

“In a system where, for 35 years, people are used to counting good money, and all of a sudden, they see that the days of counting that money have come to an end, you don’t expect them to pray for you. Of course, you expect them to fight back.

“And I think that is the process that we’re now really going through. But the truth is that, yes, the country, the sub-region, and also the continent of sub-Saharan Africa, need this refinery. So, you expect them to fight through non-supply of crude, non-purchase of the product, but I think it’s all temporary. We’ll get there,” Dangote added.

He had recalled that he was once persuaded by a former Minister of Energy in Saudi Arabia, Khalid Al-Falih, to shelve the idea of building a refinery. However, he said he told the former minister that he did not need his advice.

In June 2024, the Vice President of Oil and Gas at Dangote Industries Limited, Devakumar Edwin, accused IOCs in Nigeria of plans to frustrate the survival of the new Dangote refinery.

Edwin said the IOCs were “deliberately and willfully frustrating” the refinery’s efforts to buy local crude by hiking the cost above the market price, thereby forcing the refinery to import crude from countries as far as the United States, with its attendant high costs.

Edwin also accused the NMDPRA of granting licences indiscriminately to marketers to import dirty refined products into the country.

“It appears that the objective of the IOCs is to ensure that Nigeria remains a country that exports crude oil and imports refined petroleum products. They (IOCs) are keen on exporting the raw materials to their home countries, creating employment and wealth for their countries, adding to their Gross Domestic Product, and dumping the expensive refined products into Nigeria – thus making us dependent on imported products,” Edwin had stated.

The refinery, which started petrol production last September, is seen as a way for Africa’s biggest crude oil producer to end its reliance on the costly importation of refined fuel.

It was reported that the refinery’s entry has helped push down the pump prices of refined products even as retailers count their losses.

With the naira-for-crude deal, the Dangote refinery promised to ensure enough fuel supply to Nigeria, Africa, and the world.

IPMAN supports Dangote

The Independent Petroleum Marketers Association of Nigeria said they are with Dangote as he pushes ahead to fight the cabal.

IPMAN Publicity Secretary, Chinedu Udadike, said Dangote had promised before that he would fight the so-called cabal for the good of the masses, stressing that the association is behind him.

He said the fight is just the usual competition in any business, especially when a product is doing better than others in the market.

“Well, this is business. Competition abounds. There is no businessman whom people will not fight if he is doing well, especially when it is only your goods that are being produced, and the others are not being patronised because of the price. So, it is evident that every businessman wants to survive. It’s not an issue. What we can do is encourage him.

“We independent marketers are happy with him for his price slashes, although sometimes it’s against our own business strategy and projections. But that is part of the business, it is profit and loss.

“You know the factor of demand and supply matter determines the market. So, if he’s talking about how people want to sabotage him, he has told us that he’s ready to fight the oil cabals, and he is in this business to ensure that Nigerians don’t suffer. So, we encourage him not to lose hope, and we independent marketers support him in all ramifications,” Ukadike said.

No need to fight, says PETROAN

The National President of the Petroleum Products Retail Outlet Owners Association of Nigeria, Billy Gillis-Harry, said there should be no form of discord in the downstream.

According to him, Dangote should be allowed to refine its products with the naira-for-crude deal while importers and other traders should be given a level playing field to operate.

Gillis-Harry noted that there should be facts to back up all claims, saying there will be competition in any business, pleading, however, that it should be healthy.

He appealed to the Federal Government to supply enough crude to Dangote and other refineries.

Asked whether he felt the temporary stoppage of the naira-for-crude deal by the Nigerian National Petroleum Company Limited could have prompted Dangote’s comment, he replied that there was a need to review the pilot phase of the deal, emphasising that PETROAN was always in support of the naira petrol sales deal, which he said would make petroleum products available for all Nigerians.

He stressed that other refineries are coming onstream and there will be more competitors in the market.

“I just want all players to do their business without any fight,” the PETROAN boss said.

The naira-for-crude deal ordered by President Bola Tinubu allowed the sale of crude in naira to the Dangote refinery, prompting a crash in fuel prices.

With the supply of crude in naira, the Dangote refinery continued to crash petrol prices across the country. From about N1,100 per litre, the company slashed the price of premium motor spirit to N860.

But importers of petroleum products lamented the repeated reduction of petrol prices by the refinery. Some of the importers lamented that they were compelled to sell below their costs, as consumers only buy from where the product is cheaper.

While Nigerians were rejoicing over the price slashes, fuel importers and retailers said they were counting losses.

Credit: The Punch