International Oil Companies (IOCs) are standing firm on their stance regarding the currency denomination for crude oil transactions with modular refineries.

Despite earlier indications suggesting a potential shift towards naira payments, IOCs have asserted their preference for dollar dominance in these transactions.

The decision, communicated during a meeting involving indigenous modular refineries and crude oil producers, shows the complex dynamics shaping Nigeria’s energy landscape.

While the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) had previously hinted at the possibility of allowing indigenous refineries to purchase crude oil in either naira or dollars, IOCs have maintained a firm stance favoring the latter.

Under this framework, modular refineries would be required to pay 80% of the crude oil purchase amount in US dollars, with the remaining 20% to be settled in naira.

This arrangement, although subject to ongoing discussions, signals a significant departure from initial expectations of a more balanced currency allocation.

Representatives from the Crude Oil Refinery Owners Association of Nigeria (CORAN) said the decision was not unilaterally imposed but rather reached through deliberations with relevant stakeholders, including the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).

While there were initial hopes of broader flexibility in currency options, the dominant position of IOCs has steered discussions towards a more dollar-centric model.

Despite reservations expressed by some participants, including modular refinery operators, the consensus appears to lean towards accommodating the preferences of major crude oil suppliers.

The development underscores the intricate negotiations and power dynamics shaping Nigeria’s energy sector, with implications for both domestic and international stakeholders.

As discussions continue, attention remains focused on how this decision will impact the operations and financial viability of modular refineries in Nigeria’s evolving oil landscape.

The Dangote Refinery has surpassed some of Europe’s largest refineries in terms of capacity, according to a recent report by Bloomberg.

The $20 billion Dangote refinery, located in Lagos, boasts a refining capacity of 650,000 barrels of petroleum products per day, positioning it as a formidable player in the global refining industry.

Bloomberg’s data highlighted that the Dangote refinery’s capacity exceeds that of Shell’s Pernis refinery in the Netherlands by over 246,000 barrels per day. Making Dangote’s facility a significant contender in the refining industry.

The report also underscored the scale of Dangote’s refinery compared to other prominent European refineries.

For instance, the TotalEnergies Antwerp refining facility in Belgium can refine 338,000 barrels per day, while the GOI Energy ISAB refinery in Italy was built with a refining capacity of 360,000 barrels per day.

Describing the Dangote refinery as a ‘game changer,’ Bloomberg emphasized its strategic advantage of leveraging cheaper U.S. oil imports for a substantial portion of its feedstock.

Analysts anticipate that the refinery’s operations will have a transformative impact on Nigeria’s fuel market and the broader region.

The refinery has already commenced shipping products in recent weeks while preparing to ramp up petrol output.

Analysts predict that Dangote’s refinery will influence Atlantic Basin gasoline markets and significantly alter the dynamics of the petroleum trade in West Africa.

Reuters recently reported that the Dangote refinery has the potential to disrupt the decades-long petrol trade from Europe to Africa, worth an estimated $17 billion annually.

With a configured capacity to produce up to 53 million liters of petrol per day, the refinery is poised to meet a significant portion of Nigeria’s fuel demand and reduce the country’s dependence on imported petroleum products.

Aliko Dangote, Africa’s richest man and the visionary behind the refinery, has demonstrated his commitment to revolutionizing Nigeria’s energy landscape. As the Dangote refinery continues to scale up its operations, it is poised to not only bolster Nigeria’s energy security but also emerge as a key player in the global refining industry.

Oil prices surged as Brent crude oil appreciated to $88.42 a barrel while U.S. West Texas Intermediate (WTI) crude climbed to $83.36 a barrel.

The uptick in prices comes as the U.S. dollar index dipped to its lowest level in over a week, prompting investors to shift their focus from geopolitical tensions to global economic conditions.

The weakening of the U.S. dollar, a key factor influencing oil prices, provided a boost to dollar-denominated commodities like oil. As the dollar index fell, demand for oil from investors holding other currencies increased, leading to the rise in prices.

Investors also found support in euro zone data indicating a robust expansion in business activity, with April witnessing the fastest pace of growth in nearly a year.

Andrew Lipow, president of Lipow Oil Associates, noted that the market had been under pressure due to sluggish growth in the euro zone, making any signs of improvement supportive for oil prices.

Market participants are increasingly looking beyond geopolitical tensions and focusing on economic indicators and supply-and-demand dynamics.

Despite initial concerns regarding tensions between Israel and Iran and uncertainties surrounding China’s economic performance, the market sentiment remained optimistic, buoyed by expectations of steady oil demand.

Analysts anticipate the release of key economic data later in the week, including U.S. first-quarter gross domestic product (GDP) figures and March’s personal consumption expenditures, which serve as the Federal Reserve’s preferred inflation gauge.

These data points are expected to provide further insights into the health of the economy and potentially impact oil prices.

Also, anticipation builds around the release of U.S. crude oil inventory data by the Energy Information Administration, scheduled for Wednesday.

Preliminary reports suggest an increase in crude oil inventories alongside a decrease in refined product stockpiles, reflecting ongoing dynamics in the oil market.

As oil prices continue their upward trajectory, investors remain vigilant, monitoring economic indicators and geopolitical developments for further cues on the future direction of the market.