A gap between crude oil allocations and actual deliveries to domestic refineries is constraining utilisation levels across Nigeria’s refining sector, despite policy provisions designed to prioritise local processing.
Operators under the Crude Oil Refinery Owners Association of Nigeria say that while about 483,000 barrels per day are allocated for domestic refining, only a portion of these volumes is consistently supplied to plants. The shortfall has continued to affect operational efficiency and output across several facilities.
The issue was raised during an engagement with the Nigerian Upstream Petroleum Regulatory Commission, where refiners highlighted ongoing discrepancies between allocated volumes and delivered crude.
Chairman of CORAN’s Board of Trustees, Emmanuel Ihenacho, said the difference between allocation and delivery is linked to factors such as operational constraints, re trading activities, and flexibility provisions within the supply framework.
He noted that although domestic crude supply obligations have been incorporated into recent upstream reforms, consistent feedstock delivery remains a challenge for refinery operators.
Several modular and mid scale refineries, including Edo Refinery, Duport Pulon, and OPAC, were identified as operational but not running at full capacity due to irregular crude supply. Industry participants indicate that inconsistent deliveries also affect financing arrangements, workforce stability, and community level expectations tied to refinery operations.
Refiners also pointed to pricing considerations, noting that existing frameworks tied to international benchmarks may not fully reflect domestic operational conditions. They called for a more predictable and transparent structure to support planning and investment.
Infrastructure constraints were identified as an additional factor affecting crude movement. According to CORAN, losses between production points and delivery locations, along with limitations in pipeline networks, storage, and marine logistics, continue to impact supply efficiency. Some operators have invested in alternative logistics systems, but broader coordination remains limited.
The association also noted changes in the upstream sector following divestments by international oil companies, with indigenous producers playing a larger role. According to refiners, production strategies in some cases prioritise shorter revenue cycles, which may affect domestic supply consistency.
CORAN proposed measures including stricter enforcement of domestic crude supply obligations, development of a standardised crude sales agreement framework, improved pricing transparency, enhanced infrastructure collaboration, and clearer reporting on allocations and deliveries. The group also suggested linking export approvals and field development to compliance with domestic supply requirements.
In response, the Chief Executive of the NUPRC, Oritsemeyiwa Eyesan, encouraged refinery operators to consider upstream participation, including involvement in oil block bid rounds, as a potential approach to securing crude supply.
According to CORAN spokesperson Eche Idoko, the regulator reiterated that Nigeria has sufficient crude resources to support domestic refining and remains committed to policies aimed at increasing in country value addition.
Eyesan also advised operators to explore long term supply agreements with producers to improve predictability in feedstock availability and pricing. She acknowledged that infrastructure challenges, including pipeline limitations, evacuation bottlenecks, and storage constraints, remain key issues affecting crude delivery to domestic refineries.
The discussions reflect ongoing engagement between regulators and refinery operators on improving supply reliability and supporting capacity utilisation within Nigeria’s downstream petroleum sector.