SEATTLE (Oil Monster):The Nigerian National Petroleum Company (NNPC) Limited declared that it would halt its agreement with domestic refiners, such as Dangote Refinery, to exchange naira for crude oil. The ruling, which went into effect right away, is expected to have a big influence on Nigeria's economy overall and on the energy industry specifically.
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In October of last year, the Nigerian Federal Government implemented the naira-for-crude exchange rate. It made it possible for domestic refiners to buy crude oil in naira rather than dollars. Additionally, the agreement gave regional refineries an affordable means of obtaining oil, enabling them to contend with global firms. In order to lessen reliance on imports, the action was intended to stabilize the local currency and increase domestic refining capacity.
As a result of the agreement's termination, the nation's refineries—including the Dangote refinery—will now need to purchase their crude oil from foreign sources, and they will need to pay in US dollars rather than local currency. According to insiders, the change will raise operating expenses, which will raise fuel prices at pumps.
NNPC made the choice in spite of the fact that the nation's oil production has significantly increased since the agreement went into force.
