Nigeria's Refining Ambitions Hit by Crude Supply Crunch
Nigeria's ambitious plan to reverse its reliance on imported refined petroleum products has hit a snag. The country's Dangote Petroleum Refinery, which can process approximately 650,000 barrels of crude per day, is struggling to obtain enough domestic crude at commercially sustainable prices.
Recent data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) shows that Nigeria produced an average of 1.5 million barrels of crude oil per day in August 2026, excluding condensates. However, a significant portion of this production is directed towards export markets, leaving domestic refineries to compete with exporters and other buyers for available grades.
The NUPRC's Domestic Crude Supply Obligation requires oil producers to make crude available to domestic refineries. However, transactions operate on a 'willing buyer, willing seller' basis, meaning that refiners must negotiate with producers to secure the crude they need at acceptable prices.
NUPRC has been examining mechanisms such as domestic crude swaps to reduce transportation costs and improve availability. The regulator aims to reduce costs and improve supply by allowing refiners to exchange crude obligations between producers and refiners.