Local crude oil refiners in Nigeria have raised alarm over their inability to access crude oil for their operations, accusing oil producers of prioritising sales to international buyers who pay in dollars. This development, they say, undermines the country’s ambition to achieve petroleum refining self-sufficiency and transform into a regional energy hub.
In a statement issued on Monday, the Crude Oil Refinery Owners Association of Nigeria (CORAN), through its Publicity Secretary, Eche Idoko, criticised the Federal Government and upstream oil companies for failing to implement key provisions of the Petroleum Industry Act (PIA) 2021 that are meant to guarantee local crude supply.
Idoko lamented that policies such as the Domestic Crude Supply Obligation (DCSO) and the Domestic Crude Refining Requirement (DCRR) have not been enforced effectively. These policies, designed to allocate crude to indigenous refiners, are being ignored, leaving private refineries in a tight corner.
“Nigeria’s transition to a robust, self-reliant refining sector is being held hostage by contradictory policies and flawed market logic,” Idoko said. “The current ‘willing buyer, willing seller’ model only benefits producers who prefer to sell crude to foreign buyers at international prices, leaving local refiners struggling.”
Forex Crisis and Market Imbalance
One of the major challenges, according to CORAN, is the dollar-denominated crude pricing, which Nigerian refiners — who operate primarily in naira — are unable to match. Idoko explained that upstream companies often reject naira payments, instead opting for dollar deals with international traders, leaving local players unable to compete.
“We cannot afford crude at Brent or WTI-linked prices due to limited forex access and unstable naira exchange rates,” he added. “Producers resist selling at any discount, resulting in a deadlock where crude is unavailable for domestic use.”
Dangote Refinery the Sole Beneficiary
CORAN also pointed fingers at the Federal Government’s naira-for-crude policy, introduced in 2024, claiming it has been unfairly restricted to the Dangote Refinery, Nigeria’s largest refining facility. While this initiative was meant to protect local refiners from forex volatility, it has not been extended to smaller refineries producing diesel, aviation fuel, or other products.
“Restricting this scheme to only refineries producing Premium Motor Spirit (PMS) means only Dangote benefits. This creates a monopolistic refining structure that undermines competitiveness,” Idoko stated.
He disclosed that although about 385,000 barrels per day were allocated under the DCSO to the Dangote refinery, only a fraction was delivered — with just six cargoes received in February and March 2025, amounting to around 61,290 barrels per day, or 16% of the target.
The Need for Policy Recalibration
Idoko warned that the mismatch between crude procurement in dollars and product sales in naira exposes refiners to severe currency risks, discouraging further investment in the sector.
He called for:
A hybrid pricing model that combines international benchmarks with negotiated domestic discounts
Expansion of the naira-for-crude scheme to all licensed refiners
Revisions to the PIA to enforce supply volumes and timelines, including penalties for non-compliance
Creation of dedicated FX windows or stabilisation mechanisms to shield refiners from forex shocks
“Local refiners need access to crude at reasonable rates. Without this, the refining space will collapse. The laws exist on paper, but they are not being followed,” he said.
Learning from Global Trade Protection
Citing trade protection strategies used by the U.S. under Donald Trump and China’s long-standing industrial policies, Idoko urged the Nigerian government to prioritise domestic refining as a strategic sector.
“The United States used tariffs to revive its industries. China supports its companies through subsidies and export restrictions. Nigeria must adopt similar policies if we want to become a refining powerhouse. Dangote is already exporting aviation fuel to Europe — this shows our potential.”
Regulatory Silence and Industry Frustration
Despite repeated promises by the Nigeria Upstream Petroleum Regulatory Commission (NUPRC) to guarantee domestic crude supply through the DCSO and DCRR frameworks, local refiners say there is no meaningful enforcement.
Efforts to get the Oil Producers Trade Section (OPTS) of the Lagos Chamber of Commerce and Industry (LCCI) to comment on the matter were unsuccessful, as the Director-General, Chinyere Almona, did not respond to enquiries.
Industry experts warn that unless the government acts swiftly to resolve these issues, Nigeria’s vision of becoming Africa’s refining hub could remain a pipe dream. They stress that investor confidence, job creation, and economic diversification all depend on a functioning and inclusive domestic crude supply framework.
