A deepening crude oil supply crisis is crippling Nigeria’s efforts to revitalise its domestic refining sector, as fresh data from the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) reveal that only 57.8% of the nation’s installed refinery capacity is currently in use.
Despite the combined refining capacity of 1,214,000 barrels per day (bpd) across 10 refineries, operational output remains stuck at 701,692 bpd due to persistent crude oil shortage and technical bottlenecks. This leaves over 512,000 barrels—representing 42.2% of capacity—unutilised, undermining the federal government’s push to end petroleum import dependency.
The affected refineries include the Dangote Petroleum Refinery, Aradel Holdings, Waltersmith Refining & Petrochemical Limited, Opac Refinery, Duport Midstream, and the Edo Refining and Petrochemicals Company. State-owned facilities like the Warri, Kaduna, and two Port Harcourt refineries also remain significantly underutilised.
In a bid to ensure steady feedstock availability, the Nigerian government through the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) introduced the Domestic Crude Supply Obligation (DCSO), mandating oil producers to supply 770,500 barrels daily to local refiners in the first half of 2025. This measure was intended to reduce import dependence and optimise local refining.
However, the implementation has been fraught with non-compliance. Many exploration and production companies continue to prioritise exports over local deliveries, prompting the NUPRC to issue a stern directive in February 2025. The commission warned that it would withhold export permits from companies that fail to meet local supply requirements.
Yet, enforcement remains weak. Even the 650,000 bpd Dangote Refinery has had to import crude oil from international markets to maintain operations—an ironic twist for a country ranked among the top 10 global oil producers.
Commenting on the implications, Eche Idoko, National Publicity Secretary of the Crude Oil Refinery-owners Association of Nigeria (CORAN), stated that the unreliable supply of crude is stalling critical investment decisions.
“Most proposed refineries cannot move past the Final Investment Decision stage without guaranteed feedstock. The absence of crude is deterring both local and foreign investors, and recent reports of operational refineries struggling with crude availability only worsen investor sentiment,” Idoko warned.
He emphasised that while licenses for new refineries are being issued, the sector remains fragile unless the crude supply challenge is resolved.
Further insights from the NMDPRA show Nigeria’s gas processing plants fared slightly better, with a 63% utilisation rate. However, gas transportation and distribution networks performed dismally, operating at just 25% and below 30%, respectively.
The report also indicated underperformance in petroleum depots, operating below 50% capacity, while LPG and CNG facilities exceeded 85% usage due to increasing demand.
Despite these systemic challenges, regulators appear to be pushing forward. A total of 30 Large-Scale Technical (LTC) and 47 Large-Scale Environmental (LTE) refinery project licences have been approved in a bid to rejuvenate the sector.
As the local refining sector grapples with operational setbacks, experts say only robust policy implementation, improved infrastructure, and firm regulatory action will unlock Nigeria’s full refining potential.
For Africa’s largest oil producer, failure to bridge the supply gap not only perpetuates the costly cycle of fuel importation but threatens broader economic recovery efforts tied to the energy sector.