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Nigeria is intensifying efforts to ensure that its growing refining industry has reliable access to locally produced crude, as the country moves toward reducing dependence on imported feedstock and strengthening domestic petroleum production.

The latest push includes proposed changes to crude allocation and pricing arrangements that could make it easier for domestic refineries, including the 650,000-barrel-per-day Dangote Refinery, to obtain crude directly from producers.

The reforms are being considered amid persistent challenges surrounding the Domestic Crude Supply Obligation, which requires oil producers to make specified volumes available to Nigerian refineries.

According to the Nigerian Upstream Petroleum Regulatory Commission, compliance with the domestic crude supply framework has recently improved to more than 90 per cent, from below 43 per cent in the previous quarter.

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However, actual access to crude has remained complicated by pricing disagreements, logistics and differences between crude grades required by individual refineries.

Industry stakeholders are proposing that producers linked to international oil companies should be allowed to deliver crude directly to nearby refineries, while refiners that collect crude directly from production facilities could receive discounts reflecting savings on transportation and handling costs.

The proposed measures are expected to reduce the cost of crude supplied to local refineries and improve the reliability of their operations.

Nigeria’s ambition to maximise domestic refining has become increasingly important following the emergence of large-scale private refining capacity.

In April, domestic refineries received about 18 million barrels of crude, with 17.96 million barrels sourced locally and only about 410,000 barrels imported.

However, the country still exports a significant share of its crude. In the first quarter of 2026, about 80 per cent of Nigeria’s crude production was exported, while only 20.1 per cent was supplied to domestic refineries.

The government’s challenge is therefore not only increasing crude production but ensuring that sufficient volumes reach local refineries at commercially viable prices.

The proposed reforms are expected to support the government’s longer-term objective of building a fully integrated domestic petroleum value chain by 2030.

Such a development would reduce the need for imported petroleum products and limit the exposure of Nigerian consumers and businesses to international supply disruptions.

It would also allow Nigeria to retain more value from its crude resources through refining, petrochemicals and other downstream activities.

The success of the 2030 ambition will ultimately depend on sustained crude production, effective enforcement of domestic supply obligations and cooperation between producers and refiners.

The Traffic NG
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Amarachi Ihesiulo
The Traffic NG

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