Nigeria’s Refining Dreams Falter as Crude Supply Crisis Stalls Progress
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Nigeria’s bid to boost domestic refining capacity is being undermined by a chronic lack of crude oil supply, threatening the viability of both new and existing refineries, industry operators have warned.
Despite licensing 15 operators with a combined potential capacity of over 1.1 million barrels per day (bpd), the nation currently utilises only a fraction—about 852,000 bpd—due to supply constraints, leaving much of its infrastructure idle or operating below capacity.
Speaking exclusively to reporters, Eche Idoko, National Publicity Secretary of the Crude Oil Refinery-owners Association of Nigeria (CORAN), described the situation as a “major roadblock” to investment and a blow to the country’s energy self-sufficiency ambitions.
“Crude availability is a major issue,” he said. “Investors cannot move past the Final Investment Decision stage unless they can guarantee a reliable feedstock. And the stories of operating refineries unable to secure crude only make that harder.”
Of the licensed operators, five approved refineries are not yet operational, while three others—despite being designated for crude allocations—remain inactive. Facilities like the OPAC (10,000 bpd) and Duport (2,500 bpd) refineries are currently shut due to feedstock shortages. Even the long-troubled Kaduna refinery, although cleared to refine, is not functioning.
The Dangote refinery, seen by many as a flagship solution to Nigeria’s dependence on imported fuel, has also been caught in the supply web. The plant recently suspended sales to marketers in naira, citing a mismatch between crude allocations and payments, amidst complications in the naira-for-crude arrangement with the Nigerian National Petroleum Company Limited (NNPCL).
Insiders suggest that a significant portion of Nigeria’s crude output is diverted to foreign creditors, a fallout of loan obligations, leaving local refiners without adequate supply. Nigeria currently produces around 1.5 million barrels per day—well below the required threshold to meet both export and domestic refining needs.
CORAN’s Idoko noted that technical capacity alone is not enough. “Modular refineries can only scale if two key issues are addressed: a guarantee of crude supply and access to robust funding,” he said. “The government must lead decisively on both.”
Chinedu Ukadike, spokesperson for the Independent Petroleum Marketers Association of Nigeria, added that fluctuating government policy, security challenges, and poor infrastructure further complicate matters. “Without energy security and a guaranteed return on investment, investors will keep their distance,” he cautioned.
Billy Gillis-Harry, head of the Petroleum Products Retail Outlets Owners Association of Nigeria, pointed to a lack of technical know-how among some operators as an additional constraint.
Industry expert Olatide Jeremiah, CEO of petroleumprice.ng, stressed that licensing more refineries without an enabling environment is counterproductive. “The NNPCL’s priority seems to be honouring forward sales agreements with foreign buyers, rather than supporting domestic refining,” he said. “That is a misplaced priority.”
He called on regulators to scale up crude production to at least 2.5 million barrels per day to stabilise the industry and meet local demand. “The time for strategic alignment is now,” he concluded. “Otherwise, we risk perpetuating our dependence on imported fuel.”
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