By Opeyemi Adelakun
Nigeria’s plan to refine all crude produced locally is coming under pressure from inadequate feedstock supplies, prompting the country’s midstream and upstream petroleum regulators to seek a joint solution.
The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) said it would engage the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) to address shortages of crude oil available to domestic refineries.
The development comes as Nigeria’s installed refining capacity has reached 1.125 million barrels per day, raising expectations that the country could significantly reduce its dependence on imported petroleum products.
NMDPRA Director-General, Rabiu Umar, disclosed the planned engagement in Lagos at the 49th annual conference of the Society of Petroleum Engineers (SPE), Nigeria Council.
Umar said the Federal Government was determined to end the longstanding situation in which Nigeria exports crude oil but imports refined petroleum products.
“Every molecule of our three million barrels per day that we hope to achieve in the coming years will be refined locally,” he said.
However, achieving the ambition will depend not only on expanding refining capacity but also on increasing crude production and guaranteeing sufficient feedstock for local refineries.
The NMDPRA said it was working with the NUPRC to enforce domestic crude supply obligations under which oil producers are required to make part of their production available to Nigerian refineries.
Umar described the obligation as critical to the development of the domestic refining sector, particularly as the government seeks to expand refining capacity and reduce reliance on imported fuels.
Nigeria’s installed refining capacity reached 1.125 million barrels per day for the first time, according to the NMDPRA.
Dangote Refinery accounts for 700,000 barrels per day of the capacity and reached its nameplate capacity during tests conducted in June.
The facility has strengthened Nigeria’s position in the regional petroleum market, supplying a substantial share of domestic demand while also exporting refined products to markets in West Africa and Europe.
But the growth in refining capacity has exposed a fundamental challenge: Nigeria does not yet produce enough crude to comfortably support its expanding refining ambitions.
The NUPRC estimated the country’s crude oil production at about 1.73 million barrels per day in June, leaving a significant gap between current output and the government’s three-million-barrel-per-day target.
Closing that gap will require increased investment in oil production alongside measures to ensure that crude produced in Nigeria is made available to local refiners.
The government also faces the challenge of restoring the operational capacity of its state-owned refineries in Port Harcourt, Warri and Kaduna, which remain below their potential capacity despite years of rehabilitation efforts.
The Nigerian National Petroleum Company Limited is now seeking private-sector partners to operate the facilities under a performance-based arrangement.
Under the proposed approach, contractors would receive payment based on actual refinery performance, marking a shift from the previous rehabilitation model in which contractors were paid for rehabilitation work without a corresponding requirement for sustained commercial output.
Meanwhile, Dangote Refinery is planning a further expansion that could take its capacity to 1.4 million barrels per day.
The increasing dominance of the private facility has, however, raised concerns about the risks of relying too heavily on a single major refinery for national fuel supply.
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