Nigeria’s Refining Sector Struggles as Crude Exports Sideline Local Producers
Nigeria’s modular refineries remain starved of crude oil despite the nation’s oil output rising above 1.4 million barrels per day, deepening concerns over the country’s refining capacity and energy security.
Refinery operators have called on the Federal Government to enforce supply regulations, ensuring that crude oil producers prioritise domestic refiners before exporting the commodity.
According to the Crude Oil Refinery-owners Association of Nigeria (CORAN), domestic refinery operators have received zero crude allocation for months under the Domestic Crude Oil Supply Obligation (DCSO) framework, a key provision of the Petroleum Industry Act 2021 meant to guarantee local supply.
“Local refiners, especially modular refineries, have not been getting crude—zero allocation—under the DCSO or any special arrangement,” said Eche Idoko, Publicity Secretary of CORAN.
Crude Meant for Local Refining Diverted for Export
Despite regulations stipulating that 500,000 barrels of crude per day be allocated to local refiners, much of this supply is reportedly diverted to international markets, as producers seek quick foreign exchange earnings.
In response, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has banned the export of crude oil meant for local refineries.
“The diversion of crude meant for domestic refineries is a violation of the law,” warned NUPRC Chief Executive, Gbenga Komolafe, adding that export permits will be denied for cargoes intended for domestic refining.
However, industry analysts caution that without greater enforcement, the policy may remain ineffective, leaving local refiners to struggle.
Refineries Operating Below Capacity
With no crude supply, many modular refineries have turned to imports to survive. Idoko confirmed that operators have had to make private arrangements to source feedstock, a process he described as “herculean” and responsible for severe underutilisation of refining capacity.
While the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has made some efforts to reduce licensing costs, CORAN insists that government incentives remain heavily skewed in favour of importers of refined petroleum products rather than domestic refiners investing in local production.
Government’s Refining Targets and Industry Pushback
The NUPRC’s latest report indicates that eight domestic refineries, including the Dangote Petroleum Refinery, require 770,500 barrels per day for the first half of 2025. These refineries include:
10,000bpd OPAC refinery (Delta State)
5,000bpd WalterSmith Refinery (Imo State)
2,500bpd Duport Midstream (Edo State)
1,500bpd Edo Refinery (Edo State)
11,000bpd Aradel Refinery (Rivers State)
60,000bpd old Port Harcourt Refinery (Rivers State)
125,000bpd Warri Refinery (Delta State)
110,000bpd Kaduna Refinery (Kaduna State)
Yet, the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) alleges that crude oil producers continue to sidestep local refiners, diverting 500,000 barrels daily meant for domestic use.
Efforts to obtain a response from oil producers via the Oil Producers Trade Section of the Lagos Chamber of Commerce and Industry have so far been met with silence.
A Call for Presidential Intervention
Industry stakeholders are now urging President Bola Tinubu to step in and enforce the DCSO framework effectively.
“We are appealing to Mr President and the government’s economic team to support local refineries, especially modular refineries,” Idoko pleaded.
The government’s “Project One Million Barrels” initiative, launched in October 2024, aims to boost crude output and ensure a steady supply for both export and domestic refining. However, unless local producers receive their statutory crude allocations, Nigeria’s refining sector may remain dependent on imports, perpetuating fuel shortages and foreign exchange pressure.
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