Nigeria’s domestic refineries could have saved as much as $328.8m in the first half of 2026 if the proposed crude swap arrangement had already been in place, according to industry estimates. The potential savings are based on 82.2 million barrels of crude supplied to local refineries between January and June, with the proposed system expected to cut additional logistics and related costs by between $3 and $4 per barrel. The development could provide a major boost to refinery operators, including the Dangote Petroleum Refinery, as the industry continues to grapple with the high cost and uneven availability of crude.
The proposed arrangement is being developed by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) in consultation with refiners, crude producers and other industry stakeholders. Rather than transporting crude over long distances to meet supply obligations, refiners would be able to receive crude from a nearby terminal, while producers would later reconcile the volumes through the existing supply system. Industry officials believe the approach could significantly reduce transportation expenses, particularly for refineries that currently depend on trucking or barging to access crude.
The potential savings are substantial. At an estimated $3 reduction per barrel, the 82.2 million barrels supplied during the first six months of the year could have translated into about $246.6m in savings. At $4 per barrel, the figure rises to $328.8m. Crude deliveries increased sharply between the first and second quarters, from 28.5 million barrels in the first quarter to 53.7 million barrels in the second. If a similar volume is supplied during the second half of the year, the proposed swap could deliver comparable savings once the framework becomes operational.
The initiative could also change how crude is traded among domestic refiners and producers. The Crude Oil Refiners Association of Nigeria said stakeholders had agreed to establish a crude trading platform that would make it easier for local refineries to access available supplies. Under the proposed system, a refinery could obtain crude from a producer or export terminal closer to its location instead of waiting for crude from a distant source. Importantly, the arrangement would not reduce the international price of crude; rather, it is designed to remove extra logistics costs that can make locally sourced crude significantly more expensive.
Beyond cutting costs, the crude swap arrangement is expected to address one of the biggest challenges facing Nigeria’s refining industry: the gap between crude allocated to refineries and what is actually delivered. NUPRC data showed that while 61.9 million barrels were allocated to domestic refineries in the first quarter and producers offered 68.7 million barrels, only 28.5 million barrels were ultimately supplied. With regulators, producers and refiners now working toward a more coordinated trading and supply platform, the proposed reform could become an important step in improving crude availability, reducing refinery costs and strengthening Nigeria’s push for greater domestic fuel production.
source: punch
