Despite Nigeria’s oil production increasing to over 1.4 million barrels per day, domestic refiners, including modular refineries, continue to face severe challenges in accessing crude oil, with allocations remaining virtually nonexistent. This has prompted refinery owners to urge the Federal Government to prioritize crude supply to local refiners before allowing exports, as the lack of access has crippled their operations and limited their contribution to the energy sector.
The Crude Oil Refinery-owners Association of Nigeria (CORAN) highlighted this issue on Thursday, revealing that many refiners have resorted to importing crude to sustain operations. Eche Idoko, CORAN’s Publicity Secretary, stated in an interview that domestic refiners have been marginalized for months, receiving no allocations under the Domestic Crude Oil Supply Obligation (DCSO) framework or through any special arrangements.
“Local refiners, especially modular refineries, have not been getting crude—zero allocation under the DCSO or any other arrangement,” Idoko emphasized. The DCSO, a key component of the Petroleum Industry Act 2021, mandates the supply of crude oil to domestic refiners. However, approximately 500,000 barrels per day intended for local refining are being diverted to the international market, as producers and traders prioritize foreign exchange earnings over domestic obligations.
Industry experts note that oil companies prefer selling crude to international buyers for higher profits, bypassing statutory allocations for local refiners. In response, the Federal Government, through the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), has banned the export of crude oil designated for domestic refineries. NUPRC Chief Executive Gbenga Komolafe stressed that such diversions violate the law and warned that export permits for crude meant for local refining would be denied.
Despite this directive, producers argue that the domestic crude market remains unviable without significant reforms. CORAN’s Idoko revealed that many refiners have turned to private arrangements, including imports, to source crude, a process he described as “herculean.” He expressed hope that the NUPRC’s directive would be enforced, urging international oil companies (IOCs) to cooperate.
Idoko also called on President Bola Tinubu and his economic team to support domestic refiners, particularly modular refineries, which are investing heavily in the economy and helping to stabilize the naira. “We appeal to Mr. President and the government’s economic team to prioritize local refineries, especially modular ones,” he said.
In a recent report, the NUPRC disclosed that the Dangote Petroleum Refinery and seven other domestic refineries will require 770,500 barrels of crude per day for processing in the first half of 2025. These refineries include the OPAC, WalterSmith, Duport Midstream, Edo Refinery, Aradel, Port Harcourt, Warri, and Kaduna refineries. The NUPRC emphasized that this allocation, representing 37% of the projected daily production of 2,066,940 barrels, aligns with Section 109 of the Petroleum Industry Act 2021 and aims to optimize domestic refining capacity.
