Oil Union Orders Shutdown of Gas and Crude Supply to Dangote Refinery Over Mass Layoffs

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In a dramatic escalation of tensions within Nigeria’s energy sector, the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) has ordered a shutdown of crude oil and gas supply to the Dangote Petroleum Refinery. The decision, announced on September 26, 2025, follows what the union describes as the “unjust dismissal” of Nigerian workers and the alleged replacement of unionized staff with foreign nationals.

The refinery, located in Lagos State, is Africa’s largest and one of the world’s most ambitious oil refining projects. With an estimated processing capacity of 650,000 barrels of crude oil per day, it was expected to drastically reduce Nigeria’s dependence on imported fuel. However, the ongoing labor dispute is threatening to disrupt its operations and send shockwaves through the nation’s already fragile fuel market.

Union Orders Supply Cut to Refinery

In a letter signed by its General Secretary, Lumumba Okugbawa, PENGASSAN directed all its branches in upstream and midstream companies to immediately halt the flow of crude oil and gas to the Dangote Refinery. The directive also instructed that loading operations for vessels destined for the refinery be suspended.

According to the union, this drastic action was taken in response to mass sackings of Nigerian workers, some of whom were allegedly union members. The union accuses Dangote management of using propaganda and misinformation to avoid genuine dialogue with workers and their representatives.

“The actions of the Dangote Refinery management are unacceptable. We will not sit back while Nigerian workers are treated unfairly and replaced by foreign nationals in their own country,” the statement read in part.

The supply halt covers multiple key companies in the Nigerian oil and gas sector, including Shell Nigeria Gas, TotalEnergies, Chevron, Seplat, Oando, and the Nigerian Gas Infrastructure Company (NGIC).

Dangote Responds, Cites Sabotage and Reorganization

In reaction to the union’s claims, the Dangote Group stated that the recent layoffs were part of a restructuring process aimed at improving efficiency and addressing what it described as “sabotage risk.” The company insisted that only a small number of employees were affected, and that the measures were not targeted at union members.

Dangote management also maintained that the refinery remains committed to fair labor practices and local employment.

“Our refinery employs thousands of Nigerians across different departments. The recent changes are part of our broader efforts to strengthen operational integrity and ensure safety. We are not in violation of any labor agreements,” the company stated.

Timing Raises Economic Concerns

This labor crisis comes at a sensitive time for Nigeria’s economy. Just days earlier, the Dangote Refinery announced that it would suspend the sale of petrol in naira, starting September 28. The company explained that it had exhausted its crude allocations under the crude-for-naira swap scheme, making it difficult to sustain domestic sales.

Analysts warn that the union’s shutdown order could further compound fuel supply challenges across the country. If crude and gas flows to the refinery remain suspended, production may stall, leading to potential scarcity and upward pressure on fuel prices.

The refinery has been a key part of the government’s strategy to stabilize domestic fuel supply and reduce the country’s heavy reliance on imported refined products. A disruption of this scale could undermine those efforts.

Union vs. Private Power

PENGASSAN’s action highlights a growing power struggle between organized labor and private industrial giants in Nigeria. Traditionally, oil unions have wielded significant influence in state-owned enterprises like the Nigerian National Petroleum Company Limited (NNPCL). However, the rise of massive private players like the Dangote Group is shifting the balance of power.

Labor experts note that the dispute could set a precedent for how labor relations will be managed in Nigeria’s evolving downstream sector. If Dangote and the unions fail to reach a compromise quickly, the standoff could embolden unions to take similar action against other private operators in the future.

Government Intervention Expected

Given the strategic importance of the Dangote Refinery, it is widely expected that the federal government will step in to mediate the dispute. The refinery is not only crucial for fuel supply but also for foreign exchange earnings, as it plans to export a significant portion of its products.

The Nigerian government has invested political and financial capital in the refinery’s success, including crude supply agreements and regulatory support. A prolonged shutdown would be politically costly, especially amid rising living costs and public frustration over fuel prices.

Potential Outcomes

Several scenarios could emerge in the coming days:

1. Quick Resolution through Dialogue – Government and industry stakeholders may facilitate talks between PENGASSAN and Dangote, leading to the reversal of layoffs and restoration of supply.
2. Prolonged Standoff – If neither side backs down, the refinery could face operational delays, causing fuel shortages and further economic strain.
3. Legal or Regulatory Intervention – The government could invoke emergency powers or labor laws to compel the union to suspend its action while negotiations continue.

Conclusion

The confrontation between PENGASSAN and the Dangote Refinery marks a critical test for Nigeria’s energy sector. On one hand, it underscores the importance of protecting workers’ rights and ensuring fair labor practices. On the other hand, it highlights the vulnerability of the country’s fuel supply chain to industrial disputes.

As Nigerians brace for possible ripple effects—ranging from fuel scarcity to higher pump prices—the onus is on both the union and Dangote management to find common ground quickly. Government intervention, likely inevitable, must be carefully balanced to avoid appearing biased while protecting national economic interests.

Whether this crisis becomes a short-lived labor disagreement or a major energy sector disruption depends on the choices made in the coming days.