Stakeholders in Nigeria's oil and gas sector have called for an improvement in crude oil supply to local refineries and further development of the domestic refining sector. They argue that a robust refining sector will accelerate the country's industrialization and insulate it against adverse effects from external shocks. These calls were made at the opening ceremony of the 3rd Nigeria Oil Refining Summit in Lagos.
The chairman of the Crude Oil Refinery-Owners Association of Nigeria, Momoh Oyarekhua, emphasized the need for reforms to make it easier for local refineries to access crude oil at commercially viable prices. He noted that Nigeria cannot get the full benefit of its growing refining capacity if refineries continue to struggle to secure feedstock. Oyarekhua advocated for the full implementation of the Naira-for-Crude arrangement, including access for qualified modular refineries.
Oyarekhua also proposed a domestic crude pricing system that considers the quality of the crude, where it is being delivered, and the cost saved by not transporting the crude through international export routes. He urged for stronger enforcement of the Domestic Crude Supply Obligation as enshrined in the Petroleum Industry Act. Additionally, he suggested crude swaps and arrangements that would allow refineries to source crude from nearby oil-producing assets.
The chairman of the Independent Petroleum Producers Group, Adegbite Falade, echoed Oyarekhua's views, calling for increased crude oil production and better systems for supplying local refineries. He noted that Nigeria must strengthen the oil production side of the industry as refining capacity expands. Falade also emphasized the need for more oil exploration, faster development of oil fields, support for marginal fields, and improved access to funding.
According to Falade, the improvement in compliance with the Domestic Crude Supply Obligation is a good omen for local refineries. He canvassed a shift from short-term crude allocation to longer-term supply agreements between oil producers and refiners. The IPPG boss assured that the upstream industry is ready to work with government, regulators, refiners, financiers, and infrastructure operators to build a reliable and transparent crude supply system.
Falade also highlighted the need for dedicated and reliable routes for moving crude, as well as enough storage facilities, functional jetties, and efficient marine transportation. He emphasized that Nigeria needs to develop a stronger local system for buying and supplying crude to refineries. The IPPG called on Nigeria to take advantage of its oil resources, large market, and growing refining capacity to become a major refining and petrochemical centre in Africa.
The stakeholders believe that Nigeria has the opportunity to become a major crude producer, a competitive refining centre, and a net exporter of refined petroleum products. However, they warned that large refinery capacity alone will not achieve this goal, and that Nigeria will also need reliable oil production, secure infrastructure, clear regulations, transparent pricing, and agreements that give investors confidence.
Key points
- Experts call for improvement in crude oil supply to local refineries
- Stakeholders advocate for development of domestic refining sector
- Nigeria needs reliable oil production, secure infrastructure to achieve refining goals
