Nigeria’s domestic refining is facing a prolonged crude supply paradox, with 53.7 million barrels of crude oil and condensate supplied to local refineries in the second quarter of 2026, even as refiners continue to face challenges securing feedstock on commercially viable terms.
The Crude Oil Refinery Owners Association of Nigeria (CORAN) said the improvement in physical deliveries was encouraging but stressed that supply allocations alone would not solve the problem.
“A refinery does not consume an allocation on paper. It consumes crude delivered under commercially sustainable terms,” CORAN said.
The association identified crude pricing, transportation, evacuation infrastructure, quality, financing and payment arrangements as major factors affecting access to domestic feedstock.
CORAN said Nigeria’s situation remained contradictory because “Nigeria remains one of Africa’s largest crude-oil producers. Yet domestic refiners can still encounter significant difficulties obtaining Nigerian crude on commercially workable terms.”
The latest Q2 performance represented 97.4 per cent performance, a sharp improvement from the first quarter, when 61.9 million barrels were allocated to domestic refineries but only 28.5 million barrels were actually delivered.
CORAN noted that the Nigerian Upstream Petroleum Regulatory Commission, NUPRC had identified pricing gaps between producers and refiners as one of the major reasons crude offers did not translate into completed transactions.
The association therefore welcomed NUPRC’s efforts to develop domestic crude swaps and proximity-based supply arrangements, saying they could reduce unnecessary transportation costs.
“CORAN welcomes this direction and urges that it be accelerated,” it said.
The refiners also called for a Domestic Refinery Crude Pricing Framework, arguing that international benchmarks should take account of actual delivery points and domestic logistics costs.
“The objective is not subsidised crude. The objective is correctly priced crude,” CORAN stated.
It further renewed its support for the Federal Government’s Naira-for-Crude initiative, calling for it to become a predictable part of Nigeria’s refining policy.
“Naira-for-Crude should become an industrialisation policy rather than an episodic intervention,” the association said.
Beyond feedstock, CORAN identified access to long-term finance as another major obstacle, urging government to establish a refinery financing framework offering longer-tenor loans, credit guarantees and refinancing facilities.
It also called for investment in shared pipelines, storage terminals, depots, jetties and rail infrastructure to lower the cost of moving crude and refined products.
On petroleum imports, CORAN urged the government to ensure that imports increasingly serve only verified supply gaps rather than becoming the dominant supply model.
It said Nigeria must treat refining as strategic industrial infrastructure and use government intervention to strengthen domestic production.
Drawing lessons from the United States, CORAN said Washington’s engagement with refinery executives showed that refining was viewed as a matter of national economic security.
“That engagement is not evidence of entitlement. It is evidence that petroleum refining is considered strategically important to national economic security,” it said.
CORAN called for an urgent Presidential Refining Industry Roundtable involving government agencies, crude producers, refiners, financial institutions and infrastructure investors to establish a predictable framework for Nigeria’s refining industry.
It said the ultimate objective should be clear: “Our crude must increasingly power our refineries. Our refineries must increasingly supply our market.”
COURTESY: vanguardngr.com
