Nigeria’s Refiners Struggle Amid Crude Shortages Despite 306 Million Barrels Exported in 2025

Local oil refiners in Nigeria continue to grapple with persistent crude shortages, even as the country exported an estimated 306 million barrels of crude oil between January and October 2025, according to Central Bank of Nigeria data. While national production reached roughly 443.5 million barrels during this period, the bulk of output was earmarked for overseas markets, leaving domestic refineries scrambling for feedstock.

The Dangote Petroleum Refinery, Africa’s largest, has repeatedly raised concerns over low crude allocations despite the government’s naira-for-crude initiative. The refinery has had to source crude from the United States, Ghana, and other neighboring countries to maintain operations. Similarly, smaller modular refineries, including OPAC, Aradel, and Waltersmith, have faced intermittent shutdowns due to insufficient local supply, operating at fractions of their capacities.

Data from the Central Bank of Nigeria shows that exports accounted for nearly 69% of total production, highlighting a structural imbalance. While domestic regulations under the Petroleum Industry Act require upstream producers to allocate a portion of their crude for local refining, the “willing buyer, willing seller” policy has often left local refiners unable to compete with international buyers offering dollar-denominated prices.

Industry experts argue that the shortage does not stem from a lack of crude but from export prioritization, which is seen as more lucrative due to foreign exchange gains. Eche Idoko, National Publicity Secretary of the Crude Oil Refiners Association of Nigeria, stated that many refineries are operating far below capacity, with some producing as little as 10% of their potential output. The policy, while intended to foster competitiveness, has inadvertently hampered domestic refining growth.

Energy analysts are calling on the federal government to prioritize domestic refining in crude allocations to strengthen local production and energy security. Professor Dayo Ayoade emphasized that Nigeria has enough crude to meet both export commitments and domestic refining needs, but current practices continue to favor foreign exchange earnings over local industry sustainability, leaving refineries struggling to stay operational.

source: punch