(Bloomberg) -- Nigeria’s offer to sell oil to the Dangote Petroleum Refinery in local currency rather than dollars was greeted with caution by the company.
A senior official, speaking a day after Nigeria’s cabinet approved the plan, said the company had not asked for it. Instead, it had requested that the state sell crude to it directly. Nigerian oil is currently sold through a complex chain of intermediaries.
A Dangote spokesperson did not immediately respond to request for comment on Monday’s naira-for-crude proposal.
The plan follows a public spat over the 650,000 barrel-a-day refinery owned by Africa’s richest person Aliko Dangote and the administration of President Bola Tinubu, after a government regulator claimed Dangote had sought the suspension of imports of diesel and aviation fuel.
Such a move would hand the refinery a monopoly on their sale in Nigeria. The claim goaded Dangote into a rare press conference at which he said his diesel was the best in the country.
The latest proposal was billed as a way to ease pressure on Nigeria’s strained foreign exchange reserves, which have consistently undermined the local currency, while reducing Dangote’s reliance on imported crude.
Under the plan, the state oil company will sell 445,000 barrels a day of crude allocated for local consumption to the refinery at a fixed exchange rate that will be reviewed every six months.
Nigeria’s total crude production in June including condensates was 1.43 million barrels a day.
If the country is successful in dialing back its overseas crude purchases the ramifications would ripple across the globe by potentially leaving more US export shipments for buyers abroad and fewer Nigerian ones.
Crude prices were pressured last week on reports that the plant planned on re-selling some of the US supplies it had purchased.
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