Crude oil refiners in Nigeria have cried out over their inability to access crude oil locally for their refineries, saying oil producers prefer selling crude to international traders in dollars
The Publicity Secretary of the Crude Oil Refinery Owners Association of Nigeria, Eche Idoko, said in a statement on Monday that Nigeria’s transition to a more robust and self-reliant petroleum refining sector had been fraught with contradictions and policy ambiguities, despite the ambitious provisions of the Petroleum Industry Act 2021.
According to him, the government had also failed to implement the Domestic Crude Supply Obligation and the Domestic Crude Refining Requirement, which aim to ensure sufficient crude supply to indigenous refineries.
Idoko regretted that the ideal of local refining self-sufficiency remained elusive, caught in a web of conflicting economic interests, policy ambiguities, and what he called a flawed market logic centred on the ‘willing buyer, willing seller’ principle.
He maintained that the ‘willing buyer, willing seller’ policy was intended to foster competitiveness and market efficiency. However, he said the policy, in practice, has created a significant challenge for domestic refiners who struggle to afford crude at international market prices.
“Upstream producers prefer to sell to international buyers who pay dollar-denominated prices, while local refiners, constrained by domestic currency fluctuations and access to forex, often cannot compete.
“This market liberalisation paradoxically undermines the very goal of domestic refining self-sufficiency, as local refiners may be priced out of access to the crude they are legally entitled to receive,” Idoko stated.
Idoko stressed that although the DCSO and DCRR theoretically ensured supply security for local refineries, enforcement remained weak.
“For instance, under the current DCSO framework, approximately 385,000 barrels per day were earmarked for domestic supply to the Dangote refinery. Yet, actual deliveries have fallen drastically short of the target: only four cargoes were delivered in February 2025 and two in March, amounting to roughly 950,000 barrels, or 61,290 bpd — just 16 per cent of the target,” he disclosed.
On the naira-for-crude deal, Idoko said restricting the deal to only the Dangote refinery would defeat the intent of the policy.
“Furthermore, while the naira-for-crude policy introduced by the Federal Government in 2024 was designed to shield domestic refiners from forex volatility, it is currently limited to only refineries producing Premium Motor Spirit — effectively restricting participation to the Dangote refinery.
“This not only defeats the broader policy intent of supporting all local refiners but also entrenches a monopolistic structure in domestic refining. With only the Dangote refinery benefiting from current incentives, the refining space risks becoming uncompetitive,” he maintained.
Speaking further, Idoko argued that a price pegged to international benchmarks like Brent or WTI was unsustainable given their financing structure, access to forex, and infrastructural overhead.
“Producers, on the other hand, reject any pricing that implies subsidisation. This unresolved tension leads to a supply gridlock: refiners cannot afford crude, and producers are unwilling to sell at a discount. The absence of a clear pricing formula deepens this contradiction, resulting in erratic supply and investor uncertainty,” he stressed.
The CORAN spokesperson noted that refinery investors required supply assurances at affordable rates, warning that current frameworks lack long-term, enforceable contracts.
He emphasised that the mismatch between dollar-denominated crude and naira-denominated product sales exposes refiners to currency risk.
Making recommendations, he asked the Federal Government to introduce what he called a hybrid pricing model that “balances global benchmarks with negotiated discounts,” saying this would ensure fair access for domestic refiners.
He also pleaded with the government to extend the naira-for-crude deal to all licensed local refineries, not just those producing petrol, stating that this would improve capacity utilisation across the sector.
Idoko demanded that some sections of the PIA be revised sections “to ensure clarity on supply volumes, timelines, and enforceable penalties for non-compliance.” Also, he urged the FG to provide dedicated foreign exchange windows or stabilising mechanisms to protect refiners from forex shocks.
He concluded, “Trade protectionism is not alien to global economic strategy. The United States, under the Trump administration, promoted the ‘America First’ policy to revive local industries through tariffs and preferential treatment. China, for decades, has protected its strategic sectors through subsidies, export restrictions, and favourable domestic procurement policies.
“Nigeria must learn from these approaches. Strategic protection of the domestic refining sector — through import restrictions, targeted subsidies, and fiscal incentives — can transform the country into a refining powerhouse. Dangote is already the largest exporter of aviation fuel to Europe. With the right support, Nigeria’s refining sector could dominate energy supply across Sub-Saharan Africa and the Americas.”
The Federal Government, through the Nigeria Upstream Petroleum Regulatory Commission, had repeatedly promised to make crude available to domestic refiners through the Domestic Crude Supply Obligation and the Domestic Crude Refining Requirement initiatives.
But according to CORAN, these policies have yet to materialise, as domestic refiners of crude have still not been able to access the commodity as required, except for the Dangote refinery.
Efforts to get the crude oil producers through the Oil Producers Trade Section of the Lagos Chamber of Commerce and Industry yielded no positive results. The Director-General of LCCI, Chinyere Almona, had yet to respond to enquiries on the matter till this report was filed.
