Nigeria’s efforts to strengthen its domestic refining capacity faced a setback in the first quarter of 2026, as crude oil producers delivered less than half of the volumes allocated to local refineries.
According to data from the Nigerian Upstream Petroleum Regulatory Commission, about 61.9 million barrels were earmarked for domestic refining under the Domestic Crude Supply Obligation. Producers offered slightly more—68.7 million barrels—but actual deliveries dropped sharply to 28.5 million barrels.
This translates to just 46% of allocated volumes and roughly 41% of what was offered.
Pricing Conflicts Disrupt Supply Flow
The regulator attributed the shortfall primarily to pricing disagreements between crude oil producers and local refiners.
Under the current framework, transactions operate on a “willing buyer, willing seller” model, leaving both parties to negotiate terms independently. This arrangement has continued to create friction, slowing down supply commitments.
Pressure on Local Refining Capacity
The supply gap highlights ongoing challenges in Nigeria’s strategy to boost domestic refining and cut fuel imports, despite reforms introduced under the Petroleum Industry Act.
Industry analysts say the inconsistency has reinforced concerns raised by the Dangote Refinery, which depends on steady crude supply to maintain production. Limited feedstock availability could restrict output at the facility, widely regarded as Africa’s largest refinery.
Implications for the Oil Value Chain
The continued supply imbalance suggests that Nigeria is still struggling to fully capture value from its crude oil resources. Instead of maximizing local processing, disruptions risk prolonging reliance on imported refined products.
