Key points
- Nigerian refiners failed to lift 40.3 million barrels of crude valued at about $3.13bn in Q1 2026.
- Actual crude deliveries stood at just 28.5 million barrels despite 68.7 million barrels being offered by producers.
- Industry operators blame pricing disputes, crude grade mismatches, and structural inefficiencies for the widening supply gap.
Main story
Nigeria’s domestic refining sector left an estimated $3.13 billion worth of crude oil unutilised in the first quarter of 2026, exposing growing inefficiencies in the country’s crude supply framework despite regulatory efforts to boost local refining capacity.
Analysis of data released by the Nigerian Upstream Petroleum Regulatory Commission showed that crude oil producers collectively offered 68.7 million barrels to local refiners between January and March under the Domestic Crude Supply Obligation (DCSO) arrangement.
However, refiners lifted only 28.5 million barrels during the period, creating a supply gap of 40.3 million barrels and translating to a weak conversion rate of between 36 and 46 per cent.
The figures further revealed that while 61.9 million barrels were officially allocated to domestic refineries during the quarter, actual deliveries fell significantly below expectations, raising fresh concerns over feedstock adequacy for Nigeria’s refining ambitions.
A month-by-month breakdown showed that in January, producers supplied 25.3 million barrels, but refiners lifted only 9.2 million barrels, leaving 16.1 million barrels valued at approximately $1.09 billion unutilised.
In February, refiners lifted 9.1 million barrels from the 19.8 million barrels offered, resulting in a shortfall of 10.7 million barrels worth about $749 million.
Similarly, in March, only 10.1 million barrels were lifted out of the 23.6 million barrels made available, leaving 13.5 million barrels valued at roughly $1.28 billion unused.
The development comes despite ongoing reforms under the Petroleum Industry Act aimed at strengthening local refining, reducing fuel imports, and conserving foreign exchange.
The issues
The persistent gap between crude supply and refinery uptake highlights deeper structural and commercial challenges within Nigeria’s oil sector.
Industry stakeholders say the “willing buyer, willing seller” framework currently guiding domestic crude transactions has weakened enforcement of supply obligations, leaving transactions largely dependent on commercial negotiations.
Operators have also identified pricing disputes and crude grade mismatches as major obstacles limiting refinery utilisation.
The challenge has become more pronounced as Nigeria attempts to ramp up refining capacity through the Dangote Petroleum Refinery and several modular refinery projects.
Despite increased refining investments, local operators argue that domestic crude pricing remains uncompetitive compared to international alternatives, forcing some refiners to rely on imported feedstock.
What’s being said
In a statement, NUPRC spokesperson Eniola Akinkuotu said the figures reflected ongoing enforcement of the Domestic Crude Supply Obligation in line with provisions of the Petroleum Industry Act.
According to the commission, crude producers supplied volumes above allocated requirements during the quarter, but actual refinery uptake remained significantly below expectations.
Commenting on the development, the Crude Oil Refiners Association of Nigeria blamed the situation largely on pricing structures and crude compatibility issues.
CORAN Publicity Secretary, Eche Idoko, said Nigerian producers predominantly sell Brent-linked crude at premium prices, while some refineries, including Dangote Refinery, increasingly favour imported West Texas Intermediate crude because of operational compatibility and cost considerations.
Idoko argued that the existing pricing framework places local refiners at a commercial disadvantage and called for the creation of a domestic pricing benchmark tailored to Nigeria’s refining realities.
He maintained that aligning crude pricing with domestic refining needs would help strengthen local supply chains and reduce dependence on imported crude.
What’s next
Industry experts say regulators may need to review the operational framework of the Domestic Crude Supply Obligation to improve delivery efficiency and refinery access to feedstock.
Stakeholders are also pushing for reforms that would introduce flexible pricing mechanisms, improve crude grade alignment, and strengthen enforcement of supply commitments between producers and refiners.
Analysts warn that unless the structural bottlenecks are addressed, Nigeria’s long-term objective of achieving energy security and maximising local refining capacity may remain difficult to attain.
Bottom line
Nigeria’s domestic crude supply framework is facing increasing strain as refiners struggle to access competitively priced feedstock despite large crude volumes being made available. The $3.13 billion worth of unlifted crude in just three months underscores the urgent need for pricing reforms, stronger policy coordination, and improved alignment between crude producers and local refiners to support the country’s refining ambitions.
