Africa’s biggest oil producer owes billions in gasoline imports, according to Reuters

Nigeria has been exchanging its crude for fuel in order to meet domestic demand.

According to sources in the energy sector quoted by Reuters on Friday, Nigeria owes approximately $3 billion to oil trading firms and big international energy companies for gasoline shipments.

According to the study, the country is four to six months late with its payments for the fuel it buys with crude oil cargoes.

Due in part to the fact that many of its own refineries have deteriorated over time, Nigeria, the largest oil producer in Africa, lacks the refining capacity to satisfy domestic fuel demand. As a result, it is required to import gasoline, diesel, and refined petroleum through so-called Direct Purchase Direct Sale (DSDP) agreements, which allow it to buy fuel in exchange for crude oil. BP, TotalEnergies, Vitol, and Mercuria are among the primary suppliers to Nigeria.

As part of the reforms outlined by the country’s new president, Bola Tinubu, the swap contracts will be abolished, and payments will now only be accepted in cash. This is because when crude is used to pay for gasoline delivery, there is less crude available for export, which results in less money being made.

The commissioning of the new Dangote Petroleum Refinery, a processing facility with a capacity of 650,000 barrels per day, was announced by Nigeria last month as a measure to fight the fuel shortages. Near the city of Lagos, in the Lekki free trade zone, the refinery was constructed by the Dangote Group, a conglomerate owned by Aliko Dangote, the richest man in Africa. The processing facility, according to the Dangote Group, is anticipated to supply all of Nigeria’s fuel requirements as well as extra quantities for export.

Although analysts predict that the start of operations may be delayed due to the complexity of the commissioning procedure, crude processing was originally slated to start in June. By 2025, the plant is expected to operate at full capacity, having processed between 50 and 70 percent of its planned workload this year.