Crude oil refiners in Nigeria have raised alarm over their inability to access crude oil locally, blaming the situation on oil producers’ preference to sell crude to international traders in dollars. The refiners, under the umbrella of the Crude Oil Refinery Owners Association of Nigeria (CORAN), say this practice is threatening the viability of local refining and undermining the goals of the Petroleum Industry Act (PIA) 2021.
Publicity Secretary of CORAN, Eche Idoko, in a statement on Monday, described the current state of local refining as deeply frustrating, citing policy inconsistencies and economic contradictions as key challenges preventing the sector from thriving. He accused oil producers of ignoring domestic obligations in favour of higher foreign exchange earnings.
According to Idoko, despite the government’s Domestic Crude Supply Obligation (DCSO) and Domestic Crude Refining Requirement (DCRR) policies meant to guarantee crude supply to indigenous refiners, actual implementation has been weak or non-existent.
He argued that the ‘willing buyer, willing seller’ policy, which allows crude producers to choose who they sell to, has failed domestic refiners who cannot afford to pay international market prices in dollars due to naira fluctuations and forex scarcity.
“Upstream producers prefer to sell to international buyers who pay dollar-denominated prices, while local refiners, constrained by domestic currency fluctuations and access to forex, often cannot compete,” Idoko said.
He revealed that although the DCSO was designed to supply about 385,000 barrels per day to the Dangote refinery, actual delivery has been far below target. In February 2025, only four cargoes were delivered and just two in March, totalling 950,000 barrels or 61,290 barrels per day — just 16% of the intended volume.
Idoko also criticised the naira-for-crude policy introduced by the Federal Government in 2024, which allows refiners to buy crude in local currency. While designed to protect local players from forex volatility, he said it currently benefits only the Dangote refinery, thereby entrenching a monopoly and locking out smaller indigenous refineries.
“This not only defeats the broader policy intent of supporting all local refiners but also entrenches a monopolistic structure in domestic refining,” he said.
He added that the pricing of crude based on international benchmarks like Brent or WTI is unrealistic for Nigerian refiners, who are grappling with high infrastructure costs and limited forex. Producers, on the other hand, reject any pricing model that suggests subsidies or discounts, resulting in a stalemate that hampers crude supply to local facilities.
“The absence of a clear pricing formula deepens this contradiction, resulting in erratic supply and investor uncertainty,” Idoko stated.
He emphasised the urgent need for supply security through enforceable contracts at fair pricing. According to him, the current mismatch between dollar-priced crude and naira-priced fuel products exposes local refiners to significant financial risks.
As part of the solution, CORAN recommended a hybrid pricing model that balances global market realities with negotiated local discounts. The group also urged the government to extend the naira-for-crude policy to all licensed refineries, not just those producing Premium Motor Spirit (petrol).
Additionally, Idoko called for revisions to the PIA to clarify supply timelines, volumes, and penalties for non-compliance. He also advocated for the creation of a dedicated foreign exchange window for refiners or the introduction of mechanisms to buffer against forex instability.
Drawing inspiration from other countries, Idoko argued that Nigeria must adopt strategic protectionist measures to boost local refining. “The United States, under the Trump administration, promoted the ‘America First’ policy to revive local industries. China has for decades protected its strategic sectors through subsidies and favourable policies,” he said.
He noted that Nigeria could become a regional refining giant if it provides similar support to its domestic refineries. “Dangote is already the largest exporter of aviation fuel to Europe. With the right support, Nigeria’s refining sector could dominate energy supply across Sub-Saharan Africa and the Americas,” he said.
Despite repeated assurances by the Nigeria Upstream Petroleum Regulatory Commission (NUPRC) that crude will be made available for local refiners under the DCSO and DCRR frameworks, refiners say access remains a major issue, with only the Dangote refinery receiving significant volumes so far.
Efforts to get a response from oil producers through the Oil Producers Trade Section of the Lagos Chamber of Commerce and Industry proved abortive. The Director-General of the LCCI, Dr. Chinyere Almona, had yet to respond to enquiries as at the time of filing this report.
