KEY POINTS
• Federal Government says domestic crude supply rules must become more predictable and commercially viable for local refineries.
• CORAN wants Naira-for-Crude arrangements institutionalised and a transparent pricing framework developed for domestic crude transactions.
• Refinery owners also seek stronger pipelines, storage facilities, depots and other infrastructure as local refining expands.
MAIN STORY
The Federal Government and the Crude Oil Refinery Owners Association of Nigeria (CORAN) have called for reforms to Nigeria’s domestic crude supply system to ensure local refineries can obtain feedstock on predictable and commercially viable terms.
The call was made at the third Nigeria Oil Refining Summit (NORS) 2026 in Lagos, where participants examined the challenges of connecting Nigeria’s crude production with its expanding domestic refining capacity.
The Minister of State for Petroleum Resources (Oil), Sen. Heineken Lokpobiri, represented by his Technical Adviser, Mr Umar Gwandu, said the Domestic Crude Supply Obligation (DCSO) needed to move beyond an allocation mechanism and become a system capable of supporting investment decisions by refiners.
He said the Naira-for-Crude initiative was introduced to enable domestic refineries purchase Nigerian crude in local currency, with the broader aim of easing foreign exchange pressures and making feedstock procurement more predictable.
According to Lokpobiri, the government also has to reconcile the commercial interests of crude producers with the need to keep domestic refineries adequately supplied.
He said transactions should retain commercial flexibility through willing-buyer, willing-seller arrangements, while the regulatory framework provides sufficient transparency for both sides.
“The policy challenge is one of alignment, not confrontation,” he said.
Lokpobiri said government would continue supporting policies capable of giving investors greater certainty across the petroleum value chain.
For refinery owners, however, access to crude remains a practical challenge despite Nigeria’s large production base.
CORAN Chairman, Mr Momoh Oyarekhua, said some local refineries were still unable to obtain crude at prices that make their operations commercially sustainable.
He said continued difficulty in securing feedstock could leave refining capacity underutilised and keep Nigeria reliant on imported petroleum products.
Oyarekhua proposed that Naira-for-Crude arrangements should be formally extended to qualifying domestic refineries, including modular plants.
He also called for a standard domestic crude pricing mechanism that takes into account differences in crude quality, delivery locations and the actual cost of moving the commodity.
Such a framework, he said, should also account for the savings achieved when crude is supplied directly to Nigerian refineries rather than being exported before refined products are brought back into the country.
The CORAN chairman further called for stronger implementation of the DCSO provisions under Section 109 of the Petroleum Industry Act, while allowing producers and refiners to negotiate commercially workable arrangements.
He proposed crude swaps and supply arrangements based on geographical proximity, arguing that nearby producing assets could supply local refineries without sending crude through distant export routes.
Oyarekhua also linked the expansion of domestic refining to the need for investment in the infrastructure required to move and store both crude and petroleum products.
He called for greater development of pipelines, depots, storage terminals and jetties as part of the infrastructure supporting the refining industry.
“Support the refinery. Support the pipeline. Support the storage terminals,” he said.
The News Agency of Nigeria (NAN) reports that the summit brought together regulators, refinery operators, producers and other stakeholders in the oil and gas value chain.
THE ISSUES
- Nigeria is expanding domestic refining capacity, but the availability and price of crude feedstock remain important factors in determining whether those plants can operate consistently and profitably.
- The DCSO and Naira-for-Crude policy are intended to improve local access to Nigerian crude, but refiners and producers still need a framework that provides commercial certainty while protecting the interests of both sides.
- The crude supply question is also an infrastructure issue. Pipelines, storage facilities, depots and jetties could determine how efficiently crude reaches refineries and refined products reach consumers and export markets.
WHAT’S BEING SAID
“The domestic supply obligation should not be viewed merely as an administrative allocation mechanism.” — Heineken Lokpobiri, Minister of State for Petroleum Resources (Oil)
“The policy challenge is one of alignment, not confrontation.” — Heineken Lokpobiri, Minister of State for Petroleum Resources (Oil)
“Support the refinery. Support the pipeline. Support the storage terminals.” — Momoh Oyarekhua, Chairman, CORAN
WHAT’S NEXT
The Federal Government is expected to continue developing a regulatory framework intended to make domestic crude supply more predictable and attractive to investors.
CORAN is pushing for the institutionalisation of Naira-for-Crude arrangements, clearer domestic crude pricing and stronger enforcement of the DCSO, alongside commercial mechanisms such as crude swaps and proximity-based supply.
Investment in pipelines, storage terminals, depots and jetties will also be important as more domestic refining capacity comes on stream.
BOTTOM LINE
Nigeria’s refining expansion creates a new need to make the link between crude production and domestic refineries work commercially. For refiners, having plants is only part of the equation. Reliable access to appropriately priced crude, supported by workable regulations and infrastructure, will determine how consistently those facilities can operate and how much Nigeria can reduce its dependence on imported petroleum products.
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