Nigeria’s downstream petroleum sector could gain more than 850,000 barrels per day (bpd) in domestic refining capacity as new refineries under development begin operations, according to the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN).
In its 2025 sector review and 2026 outlook, PETROAN said privatisation, reliable crude supply, and effective regulation remain essential to market stability and lower fuel imports.
New Refineries and Capacity Expansion
PETROAN disclosed that regulators have issued over 30 refinery licences since the Petroleum Industry Act (PIA) took effect.
It said 23 refineries are currently under construction.
Most of the projects are modular and medium-scale facilities.
PETROAN said the refineries will complement the Dangote Petroleum Refinery and ease supply pressure in the domestic market.
“Cumulatively, over 30 refinery licences have been issued since the PIA came into effect, with about 23 refineries actively under development,” the association stated.
“When completed, these projects are projected to add over 850,000 barrels per day to Nigeria’s domestic refining capacity and reduce reliance on imports.”
State-Owned Refineries Under Scrutiny
PETROAN raised concerns over the condition of government-owned refineries.
It said Nigeria spent about ₦11.35 trillion over the past decade on rehabilitating the Port Harcourt, Warri, and Kaduna refineries.
Despite the spending, the facilities remain largely non-operational.
According to the association, approved contracts included $1.5 billion for the Port Harcourt Refinery and $1.48 billion for Warri and Kaduna refineries combined.
PETROAN said the outcome has triggered investigations by security agencies and legislative oversight bodies.
It linked the probes to allegations of fraud, mismanagement, and weak accountability.
The association called for forensic audits and clear accountability frameworks.
It said transparency is necessary to restore public confidence in refinery rehabilitation efforts.
Policy Reforms and Naira-for-Crude
PETROAN described 2025 as a defining year for the downstream sector.
It linked the shift to regulatory reforms, leadership changes, refinery development, and rising competition between local refiners and fuel importers.
The association reviewed the Naira-for-Crude policy, which allows domestic refineries to pay for crude oil in naira.
It said the policy carries strategic value but faces implementation challenges.
Under the scheme, authorities allocated about 250,000 to 300,000 bpd of crude to local refineries.
The allocation eased foreign exchange demand and supported price stability.
However, PETROAN said delays, pricing disputes, and limited participation reduced the policy’s overall impact.
“Strengthening transparency, timely allocation, and pricing alignment is critical for maximising the benefits of this policy in 2026,” the association said.
Operational Risks and Market Pressure
PETROAN identified the May 24, 2025, shutdown of the Port Harcourt Refinery as a major setback.
It stated that the facility failed to sustain production despite substantial public investment.
According to the association, the shutdown constrained domestic refining capacity.
It also increased reliance on imported fuel and intensified pressure on foreign exchange demand and pump prices.
PETROAN urged the government to adopt a transparent equity partnership structure.
It also called for a clear operational roadmap to restore refinery performance and improve sector efficiency.