Modular refineries in Nigeria are facing challenges due to an unreliable domestic crude oil supply, prompting them to explore importing crude oil directly from the United States. With investors hesitant to commit funds without a guarantee of feedstock, these refineries are seeking alternative sources to keep operations running smoothly. The move follows similar steps taken by Nigeria’s newly constructed Dangote refinery, which plans to purchase millions of barrels of US crude oil to supplement its feedstock.
The 650,000 barrels per day Dangote refinery aims to capitalize on cheaper oil imports from the US, highlighting the attractiveness of international grades over domestic supply. This shift reflects a broader trend in the industry to secure longer-term crude supply agreements and diversify sources amidst fluctuating market dynamics and demand weaknesses.
While Nigeria boasts a significant number of licensed modular refineries, their operation has been hindered by a lack of guaranteed crude oil supplies. To address this challenge, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) plans to serve as a middleman, facilitating agreements between local refiners and producers. The regulator aims to implement the Domestic Crude Oil Supply Obligation initiative in the second half of the year, enabling refineries to secure their required crude quantities through flexible payment options.
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