Nigeria’s growing refining industry may soon run into a major challenge: not having enough crude oil to keep its expanding refineries running. Domestic refineries are projected to require more than 1.5 million barrels per day (bpd) as existing plants increase utilisation, rehabilitation projects progress and new modular refineries come on stream. The concern is that current crude production of about 1.68 million bpd leaves a narrow margin after accounting for exports, government revenue, joint-venture obligations, production disruptions and other commitments.

Chairman of the Independent Petroleum Producers Group (IPPG), Adegbite Falade, raised the concern at the 2026 Nigeria Oil Refining Summit in Lagos, warning that Nigeria must significantly increase crude production if it wants to sustain its refining ambitions. Falade said the country has enough hydrocarbon reserves, noting that NUPRC’s January 2026 data put crude oil and condensate reserves at 37.01 billion barrels, while gas reserves stood at 215.19 trillion cubic feet. The bigger challenge, he said, is turning those underground resources into reliable production and secure crude supplies for domestic refineries.

Falade called for increased exploration, faster field development, stronger marginal-field activity, improved access to capital and better security and evacuation infrastructure. He also advocated a more transparent domestic crude market where producers can aggregate volumes, blend crude grades and use swaps or substitutions where necessary. According to NUPRC data cited at the summit, compliance with the Domestic Crude Supply Obligation (DCSO) rose sharply to 97.4 per cent in Q2 2026, from about 41 per cent in Q1. Falade, however, said the industry must now move beyond crude allocations towards bankable contracts, transparent pricing and rolling supply plans.

For refinery owners, however, the issue goes beyond simply having crude available—it must be accessible at commercially viable prices and terms. Chairman of the Crude Oil Refinery-Owners Association of Nigeria (CORAN), Momoh Oyarekhua, called for the full institutionalisation of Naira-for-Crude, with transparent access for qualifying domestic refineries, including modular plants. He also proposed a domestic crude-pricing framework that considers crude quality, delivery location and domestic transportation costs, alongside stronger enforcement of the DCSO, crude swaps and proximity-based supply arrangements.

The industry is also calling for long-term financing and shared infrastructure, including pipelines, storage facilities, depots, terminals, jetties and rail evacuation systems, to support refinery expansion. Oyarekhua argued that Nigeria should gradually reduce petroleum-product imports as domestic refining capacity grows, while establishing a clear roadmap for refining capacity, domestic supply and eventual exports. The message from the summit was clear: Nigeria’s refining ambitions will depend not only on building more refineries, but on producing enough crude, delivering it efficiently and creating pricing structures that allow local refiners to compete.

source: The sun