KEY POINTS
- Nigeria supplied only 28.5 million barrels of crude to local refineries, less than half of allocated volumes.
- Pricing disagreements between producers and refiners remain the major cause of the shortfall.
- The gap threatens Nigeria’s goal of boosting local refining despite reforms under the Petroleum Industry Act.
Nigeria’s crude oil producers delivered less than half of the volumes allocated to domestic refineries in the first quarter of 2026, raising concerns about the country’s refining ambitions.
Data from the Nigerian Upstream Petroleum Regulatory Commission shows that 61.9 million barrels were allocated to local refineries under the Domestic Crude Supply Obligation. Although producers offered 68.7 million barrels, actual supply dropped significantly to just 28.5 million barrels.
This represents about 46% of allocated volumes and roughly 41% of what was offered, highlighting a major gap between policy targets and real delivery.
The regulator attributed the shortfall largely to ongoing pricing disagreements between crude oil producers and domestic refiners.
Under the current system, transactions operate on a “willing buyer, willing seller” basis, meaning both parties must agree on pricing before deals are concluded. This arrangement has led to stalled negotiations and reduced supply to local refineries.
As a result, despite available crude, refineries have struggled to secure sufficient feedstock for operations.
Impact on Local Refining and Energy Goals
The supply challenges have slowed Nigeria’s efforts to boost local refining capacity and reduce dependence on imported petroleum products.
Analysts say the shortfall has reinforced concerns raised by the Dangote Refinery over inconsistent crude supply and pricing issues.
The situation is particularly significant given that the refinery is the largest in Africa and is central to Nigeria’s strategy to retain more value from its crude oil production.
The supply gap comes despite reforms introduced under the Petroleum Industry Act, which aimed to improve domestic crude availability and strengthen the oil and gas sector.
While the policy framework exists, implementation challenges, especially around pricing and coordination—continue to limit its effectiveness.
The data suggests that Nigeria still faces structural hurdles in aligning producers and refiners to meet domestic supply obligations.
