Crude Shortages Hit Nigerian Refineries Despite High Output

Despite Nigeria producing over 443 million barrels of crude between January and October 2025, local refiners continue to face shortages as most of the output is exported.

Central Bank of Nigeria (CBN) data shows that about 306 million barrels, nearly 69 per cent of production, were shipped abroad during the period.

The Dangote Refinery and several modular plants have repeatedly complained of inadequate supply, forcing them to source crude from the United States and neighbouring countries.

“We have the capacity to produce far more than what we are producing now. The challenge has always been inadequate feedstock,” said Eche Idoko, spokesperson for the Crude Oil Refiners Association of Nigeria.

Idoko explained that some modular refineries operate at just 10 per cent of capacity, while others shut down for months.

“A good example, the OPAC refinery has a 10,000-barrel capacity. It produces just about 1,000, and sometimes it is shut down for months because of the unavailability of crude,” he noted.

The Petroleum Industry Act requires producers to allocate crude for local refining under the Domestic Crude Supply Obligation (DCSO).

However, refiners argue that the ‘willing buyer, willing seller’ policy undermines this, as producers prefer selling to international buyers who pay in dollars.

“Upstream producers prefer to sell to international buyers, while local refiners constrained by forex cannot compete,” Idoko said.

Production trends fluctuated during the year, averaging 1.45 million barrels per day. Exports mirrored these shifts, with higher volumes in June and July and lower shipments in March and September.

Analysts say the imbalance reflects Nigeria’s prioritisation of export revenue over domestic refining.

The Nigerian Upstream Petroleum Regulatory Commission has warned that export permits will be withheld from companies failing to meet domestic supply obligations.

Yet, in April 2025, out of 21 cargoes reserved for local refiners, only 10 were lifted due to pricing and crude grade disputes.

Aliko Dangote confirmed that his refinery had to import crude despite a naira-for-crude deal. “The US alone supplied 100 million barrels in a year,” he said, underscoring the scale of reliance on foreign feedstock.

Energy expert Professor Dayo Ayoade urged the government to prioritise domestic refineries in crude allocation.

He argued that strengthening local refining capacity is essential to reduce dependence on imports and achieve energy security.

Coined from The PUNCH