The President of the Crude Oil Refinery Owners Association of Nigeria, Momoh Oyarekhua, has called for a progressive ban on petroleum product imports to strengthen local refining. He made this statement at the 3rd Nigeria Oil Refining Summit in Lagos, emphasizing the need for Nigeria to use its crude oil to feed domestic refineries rather than exporting crude and importing refined products. Oyarekhua also advocated for the full implementation of the Naira-for-Crude policy.
Oyarekhua demanded a new domestic crude pricing template that reflects crude quality, delivery location, and actual domestic evacuation expenses. He urged stronger enforcement of the Domestic Crude Supply Obligation under Section 109 of the Petroleum Industry Act, allowing commercially viable arrangements between producers and refiners. Crude swaps and proximity-based supply arrangements should be encouraged, enabling producers to supply nearby refineries without unnecessary transportation.
The Crude Oil Refinery Owners Association president proposed a Refinery Development Financing Framework offering long-term financing, guarantees, and refinancing mechanisms for refinery construction and expansion. He suggested investment in shared infrastructure, including pipelines, depots, storage terminals, jetties, and rail evacuation systems. Oyarekhua also recommended strategic petroleum product reserves to cushion temporary refinery shutdowns and international supply disruptions.
Chairman of the Independent Petroleum Producers Group, Adegbite Falade, stated that Nigeria could reliably supply domestic refineries by increasing crude production, protecting evacuation infrastructure, and matching crude grades with refinery configurations. Falade identified key priorities, including increased production, modern evacuation infrastructure, a transparent domestic crude market, and the development of Nigeria as a regional refining and petrochemical hub.
A Federal High Court in Abuja has ordered the Nigerian Midstream and Downstream Petroleum Regulatory Authority to continue granting import licenses to eligible oil marketers. The court ruled that the regulator's refusal to issue or renew licenses to Matrix Energy, AA Rano, and AYM Shafa was inconsistent with the Petroleum Industry Act. The companies had argued that the refusal restricted competition and potentially entrenched dominance by local refineries.
The court's judgment affirms the right of eligible oil marketers to obtain petroleum product import licenses, provided they meet statutory and regulatory requirements. The marketers had invested over $20 billion in infrastructure, logistics, and retail networks. Their lawyer argued that allowing imports alongside local production would promote competition, discourage monopoly, and improve the downstream market.
Key points
- Refinery owners call for a progressive ban on petroleum product imports to boost local refining.
- A court rules that import licenses must still be granted to eligible marketers to promote competition.
- Domestic refining capacity is increasing, with local refineries supplying 3.18 billion liters of petrol in the first quarter of 2024.
