The ongoing rift between Nigeria’s crude oil producers and local refiners has taken a new turn as the crude row deepens, following revelations that 11 million barrels of crude oil offered to domestic refineries in a single month were rejected.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) disclosed that despite repeated complaints from refinery owners over inadequate crude feedstock, a significant portion of crude made available under the Domestic Crude Supply Obligation (DCSO) remains unclaimed.
According to the Chief Executive Officpp5geq er of NUPRC, Gbenga Komolafe, who was represented by Boma Atiyegoba, local refiners have repeatedly turned down crude oil cargoes due to pricing disagreements and grade preferences — even though crude supply has been made available to meet domestic demand.
Refiners Reject Crude Despite Supply Availability
Speaking at the Crude Oil Refinery Owners Association of Nigeria (CORAN) summit in Lagos, Komolafe stated that, “In April alone, out of 48 available cargoes for export, 21 were reserved for domestic refining under the DCSO framework. However, only 10 were lifted, leaving 11 unclaimed.”
The NUPRC boss explained that while refiners often blame crude shortages for their operational struggles, the situation is not entirely a matter of availability but rather a result of commercial and technical challenges.
“It’s a willing buyer, willing seller arrangement,” Komolafe said. “The commission has deliberately refrained from setting prices to allow for fair market negotiation between refiners and producers. Crude oil remains an international commodity whose pricing depends on multiple indices.”
He added that eight of the 11 unclaimed cargoes were rejected due to pricing disputes, while the remaining three were turned down because of specification and crude grade mismatches. “Refiners prefer specific blends that maximize their yield and profit margins. If the offered crude doesn’t align with their refining economics, they simply decline,” he explained.
Dangote and Modular Refiners Voice Concerns
The development comes amid ongoing complaints from local operators — particularly the Dangote Refinery and modular refinery owners — who have persistently alleged limited access to local crude.
The 650,000-barrel-per-day Dangote Refinery, for instance, has repeatedly raised concerns about relying on imports from the United States to sustain its operations, calling on the Federal Government to enforce the domestic crude supply provisions of the Petroleum Industry Act (PIA).
Similarly, several modular refinery owners have argued that inadequate domestic supply has hindered their operations, limiting their ability to meet Nigeria’s growing fuel demand and achieve energy self-sufficiency.
Commercial Barriers and Pricing Complexities
The crude row deepens as refiners reject 11m-barrel local supply, exposing the ongoing commercial tensions within Nigeria’s petroleum sector. While the NUPRC insists that crude is available, many refiners maintain that pricing terms are often unrealistic and do not reflect domestic production costs.
Refiners argue that the “willing buyer, willing seller” model — though market-driven — favors large producers and international traders, leaving smaller domestic players at a disadvantage.
“The government must provide clarity on how much crude is being allocated to local refiners,” said Dolapo Okulaja, Vice-Chairman of CORAN. “Many refiners receive far less than they require. You can’t run a 20,000-barrel-per-day facility on 5,000 barrels. That gap makes it difficult to repay investors or sustain operations.”
Okulaja also dismissed suggestions that Nigerian refiners are privileged, emphasizing that most operators face high operational costs and infrastructure gaps. “We are not spoiled. Refining locally adds value, creates jobs, and saves foreign exchange. But without enough crude and proper infrastructure, our capacity remains underutilized,” she said.
Refining Capacity and Infrastructure Deficit
Industry experts warn that the challenges go beyond supply and pricing. Infrastructure deficits — particularly the lack of dedicated pipelines and crude transport facilities — continue to hinder efficient supply to refineries across the country.
Okulaja noted that transporting crude oil via road tankers is inefficient and unsustainable. “We cannot be delivering crude in trucks. Nigeria needs to invest in pipeline infrastructure and enable public-private partnerships to ease delivery to refineries,” she added.
Similarly, Momoh Oyarekhua, President of CORAN, argued that while the PIA aims to boost domestic refining, some of its clauses have complicated implementation. “The Act recognizes domestic crude supply as a priority, but introducing the willing buyer, willing seller clause undermines the obligation. You can’t have both,” he said.
Analysts Urge Refiners to Diversify Crude Blends
Meanwhile, the Executive Secretary of the African Refiners and Distributors Association, Anibor Kragha, advised Nigerian refiners to broaden the range of crude blends they can process.
“Our refiners are too limited in their crude slate,” he said. “Globally, successful refineries adapt to multiple blends to maximize yield and reduce dependency on specific grades. That’s the model Nigeria must adopt to boost domestic refining output and strengthen the energy value chain.”
Kragha also urged the government to ensure Nigeria meets its OPEC production quota while balancing local refining needs and export earnings. “Fight for your OPEC quota, increase production, refine domestically, and export efficiently,” he said.
The Road Ahead for Nigeria’s Oil Sector
As the crude row deepens and refiners reject 11m-barrel local supply, stakeholders believe that resolving the issue will require both regulatory flexibility and infrastructure investment.
Experts emphasize that consistent supply, transparent pricing, and policy coherence are crucial to ensuring Nigeria achieves full refining independence.
Until those gaps are closed, the tension between regulators and refiners will likely persist — delaying Nigeria’s long-sought goal of becoming a fully self-sufficient refining hub.
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