Nigeria's refining industry is on the verge of a crude supply crisis, with domestic refineries expected to demand more than 1.5 million barrels per day. Currently, the country produces approximately 1.68 million barrels per day. This development has raised concerns about the country's ability to meet the demands of local refiners. The Chairman of the Independent Petroleum Producers Group, Adegbite Falade, has warned that Nigeria cannot sustain its refining ambitions without significantly increasing crude production.
According to Falade, refinery demand could exceed 1.5 million barrels per day as existing plants increase utilisation, rehabilitation progresses, and more modular refineries come online. At current production levels, the margin left for crude exports, government revenue, joint-venture obligations, production disruptions, OPEC commitments, and other requirements would become extremely narrow. Falade emphasised that Nigeria's challenge is not a lack of hydrocarbon resources but rather converting reserves into production and securing a reliable supply.
Nigeria's crude oil and condensate reserves stand at 37.01 billion barrels, while gas reserves are at 215.19 trillion cubic feet, as of January 2026. Falade stressed that the challenge lies in converting reserves into production and production into secure supply. He called for greater exploration, faster field development, marginal-field growth, and improved access to capital, alongside stronger security and modern crude evacuation infrastructure.
Falade also urged stakeholders to build a domestic crude market capable of aggregating producers' volumes, facilitating grade blending, and enabling swaps and substitutions. He cited data showing that compliance with the Domestic Crude Supply Obligation rose to 97.4 per cent in Q2 2026, from about 41 per cent in Q1. The next step, he said, is to move from annual crude allocations to rolling supply planning, mandates to bankable contracts, opaque discounts to transparent pricing, and scarcity management to production growth.
The Chairman of the Crude Oil Refinery-Owners Association of Nigeria, Momoh Oyarekhua, said the immediate challenge for refiners is ensuring that available crude can be accessed on commercially viable terms. Despite growing domestic refining capacity, some refineries still struggle to secure crude, while petroleum-product imports continue. Oyarekhua called for the full institutionalisation of Naira-for-Crude, with transparent access for qualifying domestic refineries, including modular plants.
Oyarekhua also demanded a domestic crude-pricing template that reflects crude quality, delivery location, avoided international logistics costs, and actual domestic evacuation expenses. CORAN proposes crude swaps and proximity-based supply arrangements to enable nearby producing fields to supply domestic refineries without unnecessary transportation through distant export infrastructure. Oyarekhua called for a Refinery Development Financing Framework providing long-tenor loans, guarantees, and refinancing for new plants and capacity expansion.
Oyarekhua emphasised that Nigeria should not continue exporting crude, exporting jobs, and importing petroleum products at considerable economic cost. He urged the government to establish a clear domestic refining roadmap covering refining capacity, domestic market share, imports, and eventual export capacity. The objective, he said, is to refine more, import non, create more value, create more jobs, and build a stronger Nigeria.
Key points
- Nigeria's refining industry may face a crude supply crunch as demand nears 1.5 million barrels per day.
- The country needs to increase crude production and secure evacuation infrastructure to meet refining ambitions.
- Stakeholders are calling for a transparent, competitive, and investable domestic crude market.
