Nigeria to begin naira crude deal on 1st October

Nigeria is on the brink of a significant milestone as it gears up to commence the sale of crude oil in Naira on Tuesday. This move comes as Dangote Refinery, a key player in the country's petroleum industry, sets in motion plans to transport 75% of its local petroleum product supply through sea routes, targeting strategic locations like Warri, Port Harcourt, and Calabar. Chinan Dikwal, Vice Chair at the African Energy Council, weighed in on these developments and delved into the potential impact of escalating tensions in the Middle East on oil prices. The international oil market has been a topic of concern, especially with recent events such as Israel's strikes in Beirut, Lebanon, and Yemen, as well as the death of Hezbollah leader Hassan Nasrallah. Despite these developments, the market has not seen a significant increase in oil prices, with analysts attributing this to the perceived restraint exhibited by conflicting parties. Dikwal highlighted the potential for oil prices to soar if supply routes like the Strait of Hormuz are impacted, which could push the price beyond $100 per barrel. Nonetheless, the current optimism stems from the perceived lack of direct impact on oil supply. Turning focus to Nigeria's domestic oil sector, the news of the Nigerian National Petroleum Corporation (NNPC) initiating Naira crude sales to Dangote Refinery has sparked enthusiasm. Dikwal expressed optimism about the move, noting the potential eradication of long-standing issues such as fuel queues and foreign exchange pressures. By streamlining the supply chain and reducing forex burdens, the Naira crude deal presents an opportunity to bolster the local market. Dikwal emphasized that the proximity of Dangote Refinery eliminates logistical costs and ensures a secure supply chain, pointing towards an impending deregulation of the sector. As the government prepares for NNPC to be the primary distributor of Dangote's products, discussions have emerged on the possibility of opening the market to other offtakers. While acknowledging the complexity of this transition, Dikwal stressed the importance of competition in enhancing sector efficiency. Additionally, he commended Dangote Refinery's strategy of utilizing sea routes for product distribution, highlighting the benefits of reducing road congestion and enabling access to diverse regions. By strategically using ports in Warri, Port Harcourt, and Calabar, Dangote Refinery aims to revolutionize the local supply chain and facilitate seamless product distribution. As Nigeria ventures into this new chapter of Naira crude sales and embraces innovative approaches to refine sector operations, the industry stands poised for transformative changes that could reshape the nation's energy landscape.