Nigeria is taking fresh steps to address crude oil supply shortages to local refineries, as the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) prepares to work with the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) to resolve supply challenges facing the country’s growing refining industry. The move comes as Nigeria’s installed refining capacity has climbed to about 1.125 million barrels per day, led by the 700,000-barrel-per-day Dangote Refinery.
Speaking at the 49th annual conference of the Society of Petroleum Engineers (SPE) Nigeria Council in Lagos, NMDPRA Director General Rabiu Umar said securing enough crude for domestic refineries has become increasingly important. He explained that the Federal Government wants to break away from the long-standing pattern of exporting crude oil while importing refined petroleum products. According to Umar, the government’s ambition is for every barrel produced in Nigeria to eventually be processed locally as the country works towards a target of 3 million barrels per day.
To make that vision possible, the NMDPRA and NUPRC are expected to strengthen the enforcement of domestic crude supply obligations, which require oil producers to provide part of their output to local refineries. Umar described the requirement as critical to the expansion of Nigeria’s refining sector. However, the country still faces a major hurdle: crude production remains far below the government’s long-term target, with NUPRC estimating June production at roughly 1.73 million barrels per day.
Nigeria’s refining story has also become increasingly centred on the Dangote Refinery, which currently provides the largest share of the country’s refining capacity and has helped Nigeria emerge as a net exporter of refined petroleum products. The refinery supplies a significant portion of domestic demand while also sending products to international markets. But the growing dominance of one major refinery has raised concerns about the risks of excessive dependence, particularly as the Port Harcourt, Warri and Kaduna refineries operated by the Nigerian National Petroleum Company Limited continue to perform below their potential.
The Federal Government is therefore facing a delicate balancing act: increase crude production, guarantee steady supplies to local refineries and bring struggling state-owned facilities back to life. The NNPCL is now looking to work with private partners under a performance-based model, where payments would depend on actual refinery output. If the strategy succeeds, Nigeria could gradually move closer to its goal of refining more of its own crude, reducing its exposure to imported fuels and creating a stronger domestic petroleum industry.
source: Leadership
