Oil producers in Nigeria have offered about 58.8 million barrels of crude oil to domestic refineries in the second quarter of 2026, exceeding the 55.1 million barrels allocated under the Domestic Crude Supply Obligation framework.

The development signals a stronger commitment by upstream oil companies to meet local refining demand amid the expansion of domestic refining capacity led by the Dangote Petroleum Refinery and the gradual upgrade of modular refineries.

This was disclosed by the Nigerian Upstream Petroleum Regulatory Commission in its latest report on the enforcement of the Domestic Crude Supply Obligation obtained by our correspondent on Friday.

According to the commission, producers offered 58.8 million barrels for the quarter, representing volumes made available to local refiners under the regulatory framework introduced to guarantee feedstock supply to domestic processing plants. The report showed that while 55.1 million barrels were officially allocated for the period, actual offered volumes surpassed the allocation by 3.7 million barrels.

However, the regulator stated that final figures for crude volumes eventually supplied and converted into refined petroleum products would be released after the May 2026 Domestic Crude Request Review and Production Curtailment Management meetings.

It stated, “Allocated: 55.1M BBLS | Offered: 58.8M BBLS.” The commission added, “Supplied: BBLS | Conversion: – per cent (Update for supplied volumes will be after the May 2026 DCRR and PCM meetings).”

The latest figures indicate a notable increase in producers’ willingness to supply the domestic market compared to previous quarters, amid persistent concerns over crude shortages faced by local refineries.

The NUPRC attributed the shortfall to pricing disputes, crude grade mismatches, and the “willing buyer, willing seller” framework, which leaves transactions subject to commercial negotiations rather than strict enforcement.

The situation has continued to limit refinery utilisation and slow Nigeria’s drive towards energy self-sufficiency, even as investments in refining capacity, led by the Dangote Petroleum Refinery and several modular plants, gather momentum.

Commenting, the Crude Oil Refiners Association of Nigeria attributed the growing reliance of the Dangote Petroleum Refinery on imported crude to commercial pricing structures and crude grade differentials in the domestic market.

Speaking in an interview with our correspondent, CORAN Publicity Secretary, Eche Idoko, said the refinery’s preference for imported crude is largely driven by economics and product compatibility rather than a lack of demand for local supply.

He explained that Nigerian producers predominantly sell Brent-linked crude at a premium, while the refinery often imports West Texas Intermediate crude, which better aligns with its operational configuration.

Idoko said, “So one of the major issues we are having with Dangote buying more crude from the U.S. is because of the type of products offered and the pricing. It is based on commercials. So producers sell more Brent crude at a premium, but the import from other countries is WTI, another grade that is utilised by the refinery.”

He argued that the current pricing framework places domestic refiners at a disadvantage compared to international sourcing options, particularly in terms of competitiveness and risk exposure. According to him, a more tailored pricing mechanism is needed to reflect Nigeria’s local refining realities and reduce reliance on external markets.

Meanwhile, Saturday PUNCH gathered that discussions to address concerns surrounding crude oil pricing, availability, and commercial terms for local refiners had commenced, with a stakeholders’ meeting expected before the end of the month.

According to an official aware of the development, the planned roundtable would involve the Nigerian Upstream Petroleum Regulatory Commission, crude oil producers, and local refinery operators.

The source said, “As a matter of fact, before the end of this month, there will be a roundtable involving both regulatory agencies, the NUPRC, producers, and local refiners to discuss pricing issues, crude availability, and the commercial terms for crude offtake.

“One of the major concerns from local refiners has to do with the commercial terms being offered by producers. Many of the refiners believe the conditions are difficult for them to meet, and that has affected their ability to compete effectively in the market.”

The official added that some modular refineries, such as Waltersmith Refinery and Aradel Holdings, operate under slightly different arrangements because they source crude directly from their affiliated oil fields.

“Waltersmith and Aradel modular refineries get crude supply from their own fields, so their situation is slightly different from other local refiners.

“They take about 2,000 barrels per day each from those facilities, which gives them some level of supply stability. But for several other refiners that depend on third-party producers, the challenge has largely been around pricing and commercial conditions,” the source said.

Further findings by our correspondent showed that crude oil producers offered lower volumes under the Domestic Crude Supply Obligation framework in the second quarter of 2026 compared to the first quarter.

Data obtained from the Nigerian Upstream Petroleum Regulatory Commission showed that in the first quarter of 2026, about 61.9 million barrels of crude oil were allocated to local refineries, while producers offered 68.7 million barrels during the period.

However, in the second quarter, allocated volumes dropped to 55.1 million barrels, while producers offered 58.8 million barrels to domestic refiners. The figures indicate a decline in both allocated and offered crude volumes between the first and second quarters, although upstream operators continued to supply volumes above official allocations under the DCSO arrangement.

The increase may have been driven by mounting regulatory pressure from the NUPRC, as well as rising demand from domestic refineries, especially the Dangote refinery, modular refinery operators, and the ongoing rehabilitation of government-owned facilities.

The Domestic Crude Supply Obligation was introduced under the Petroleum Industry Act to ensure that local refineries receive adequate crude oil supply before exports are considered.

Under the arrangement, the NUPRC is empowered to enforce compliance by upstream producers, while refiners submit their crude requirements periodically through a structured allocation process.

The implementation of the policy gained increased prominence following repeated complaints by local refiners over feedstock shortages despite Nigeria’s status as Africa’s largest crude oil producer.

Officials of the Dangote refinery had in recent months raised concerns over difficulties in sourcing sufficient domestic crude, forcing the refinery at some point to rely partly on imported crude grades.

The Federal Government has repeatedly insisted that boosting domestic refining remains central to its energy security strategy, particularly as Nigeria seeks to end decades of dependence on imported petroleum products.

Experts believe that sustained compliance with the DCSO framework could significantly improve refinery utilisation rates, reduce pressure on foreign exchange, and deepen value addition within the oil and gas sector.

The final supplied volumes and conversion efficiency expected after the reconciliation meetings are likely to determine the actual level of compliance achieved during the quarter and the extent to which the offered crude translated into refined fuel production.