Local crude oil refiners in Nigeria have raised alarm over their inability to access crude oil, blaming oil producers for prioritising exports to international buyers who pay in dollars.
In a statement released on Monday, Eche Idoko, Publicity Secretary of the Crude Oil Refinery Owners Association of Nigeria (CORAN), said that despite the lofty promises of the Petroleum Industry Act (PIA) 2021, Nigeria’s move toward refining self-sufficiency is being hindered by weak enforcement, conflicting interests, and flawed policies.
He criticised the government’s failure to implement key provisions of the PIA — particularly the Domestic Crude Supply Obligation (DCSO) and the Domestic Crude Refining Requirement (DCRR) — which are meant to guarantee crude supply to local refineries.
“The dream of achieving self-sufficiency in local refining is slipping away,” Idoko stated. “Instead of aligning with national goals, we’re stuck in a policy environment where market logic overrides national interest.”
Idoko noted that the ‘willing buyer, willing seller’ policy, intended to enhance market efficiency, has instead worked against local refiners. Oil producers, he explained, prefer to sell to international buyers who pay in dollars, while domestic refiners struggle to match those prices due to naira devaluation and limited access to foreign exchange.
“This policy is pricing out local refiners from crude oil access — even though they are legally entitled to it,” he said.
Idoko also criticised the government’s inconsistent enforcement of DCSO. For example, although 385,000 barrels per day were designated for the Dangote Refinery, actual deliveries fell drastically short — with just six cargoes delivered in the first quarter of 2025, amounting to only 16% of the target.
He further argued that the government’s naira-for-crude policy, introduced in 2024 to protect local refiners from forex volatility, unfairly benefits only the Dangote Refinery.
“This selective approach defeats the purpose of the policy and threatens to create a monopoly,” Idoko warned. “Refineries producing other petroleum products should also be allowed to benefit.”
He called the current crude pricing system — which pegs domestic crude to international benchmarks like Brent or WTI — unsustainable for local refineries, which are burdened by high operational costs and limited access to forex. At the same time, producers resist any pricing that implies a subsidy, leading to a supply deadlock.
“This unresolved pricing tension has created a gridlock,” Idoko said. “Refiners cannot afford to buy, and producers refuse to sell at reasonable rates. The absence of a clear pricing formula adds to investor uncertainty.”
He stressed the need for long-term, enforceable supply contracts that give refinery investors confidence and protect them from currency fluctuations.
Key Recommendations from CORAN:
- Adopt a hybrid pricing model that blends global benchmarks with negotiated discounts to ensure domestic refiners can access crude affordably.
- Extend the naira-for-crude policy to all licensed refineries, not just those producing PMS.
- Revise specific sections of the PIA to include clear supply obligations, delivery timelines, and enforceable penalties for violations.
- Create dedicated forex windows or buffers to protect refiners from exchange rate volatility.
Idoko also drew global parallels, pointing to how countries like the U.S. and China have historically used trade protectionist policies to safeguard strategic industries.
“The U.S. had ‘America First,’ China uses subsidies and restrictions — Nigeria must also protect its refining sector through import controls, subsidies, and fiscal incentives,” he said. “With the right support, our local refineries can dominate energy supply in Sub-Saharan Africa and beyond.”
The Nigeria Upstream Petroleum Regulatory Commission (NUPRC) has repeatedly promised to enforce the DCSO and DCRR. However, CORAN says little progress has been made, as access to crude remains elusive for most domestic refiners, except Dangote.
Efforts to obtain responses from the Oil Producers Trade Section of the Lagos Chamber of Commerce and Industry (LCCI) were unsuccessful, as its Director-General, Chinyere Almona, had not responded as of the time this report was filed.
