Access to crude oil by domestic refiners, including modular refineries, remains minimal despite Nigeria’s oil output rising to over 1.4 million barrels per day. As a result, refinery owners are urging the Federal Government to ensure that crude oil producers prioritize supplying domestic refiners before exporting the commodity.
This issue has led to significant challenges for local refineries, which are unable to operate at full capacity, limiting their contribution to the energy sector. The Crude Oil Refinery-owners Association of Nigeria (CORAN) confirmed this problem on Thursday, revealing that producers are turning to imports to stay operational and increase production capacity.
CORAN’s Publicity Secretary, Eche Idoko, stated in an interview that domestic producers within the supply chain have been marginalized, with no crude allocations received under the Domestic Crude Oil Supply Obligation (DCSO) framework or through other special arrangements for several months. He emphasized that modular refineries, in particular, have received zero allocations.
The DCSO, part of the Petroleum Industry Act of 2021, is designed to regulate and enforce local crude oil supply, but about 500,000 barrels per day meant for domestic refining are being diverted to international markets. Oil producers and traders, seeking quick foreign exchange earnings, are bypassing statutory allocations for local refineries in favor of exports.
In response to this issue, the Federal Government, through the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), has banned the export of crude oil intended for domestic refineries. NUPRC’s Chief Executive, Gbenga Komolafe, stressed that diverting crude oil meant for local refineries is a violation of the law.
He warned that the commission would now deny export permits for crude oil cargoes intended for domestic refining.
