Nigeria loads first crude at new $20bn Dangote refinery

Key Takeaways

Nigeria, despite being one of Africa's largest oil producers and having the continent's top economy, heavily relies on imported fuel and diesel due to a lack of domestic refining capacity. The country engages in crude oil swaps, exchanging its crude for refined products, particularly petrol, which has been subsidized for years to maintain lower prices in the domestic market. This dependency on fuel imports and subsidies has posed significant challenges, leading to a substantial drain on foreign exchange. During a period of declining oil revenues and shortages in foreign currency, Nigeria struggled with the economic impact. According to figures from the Central Bank of Nigeria (CBN) on the movement of external reserves, a report by CSL Research has revealed that the country's external reserves have decreased by $1.65 billion, especially since the Foreign Exchange (FX) unification in June. The data indicates that external reserves dropped from $34.12 billion as of June 30, 2023, to $32.88 billion as of December 4, 2023, reflecting a 5% decline. While other sources, such as foreign remittances, foreign currency loans, and yields from foreign assets, contribute to Nigeria's external reserves, the primary source of inflow remains revenue from crude oil sales.