Local refiners under the umbrella of the Crude Oil Refinery Owners Association of Nigeria have raised concerns over the diversion of crude oil allocated for domestic refining, warning that inconsistent deliveries are undermining plant utilisation, financing, and Nigeria’s energy security.
The CORAN Board of Trustees Chairman, Emmanuel Ihenacho, stated this during a courtesy visit to the Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission, Oritsemeyiwa Eyesan, yesterday.
Ihenacho said the gap between crude allocation and actual delivery continues to weaken local refining efforts, despite policy provisions designed to prioritise domestic supply.
According to him, data showed that 483,000 barrels are often allocated to domestic refineries, but only a fraction gets to the local refineries. The rest, he argued, is due to operational constraints, re-trading, or flexibility provisions, adding that the diverted barrels represent lost jobs, lost value, and lost opportunities for Nigeria.
He acknowledged ongoing reforms in the upstream sector and noted that domestic crude supply obligations were beginning to feature in planning.
However, Ihenacho stressed that allocations alone were insufficient if volumes did not consistently reach local refineries, adding that erratic feedstock supply was leaving operational plants underutilised.
“We stand before you today as partners in execution — the downstream arm of Section 109 of the PIA. When crude is allocated for domestic refining, we are the ones who translate that allocation into petrol in Ibadan, diesel in Kano, and aviation fuel at MMIA. When you secure crude at the wellhead and terminal, we ensure that value is retained within Nigeria’s economy.
“However, madam Chief Executive, as you are fully aware, allocation does not always translate to delivery. And a license does not automatically translate to production. That gap between policy and product is why we are here today. Permit me to respectfully highlight the realities as experienced by your downstream partners:
“First, DCSO compliance remains suboptimal. Data indicate that of the 483,000 barrels per day allocated, only a fraction consistently reaches domestic refineries. The rest is lost to operational constraints, re-trading, or flexibility provisions. Each diverted barrel represents lost jobs, lost value, and lost opportunity for Nigeria,” he stated.
The CORAN chairman noted that several modular and mid-scale refineries remain functional but cannot run at optimal levels because crude deliveries are inconsistent. He warned that unstable supply undermines financing arrangements, weakens workforce confidence, and affects host communities that depend on refinery operations.
“Our members: Edo Refinery, Duport/Pulon, OPAC, among others, remain operational but underutilised due to inconsistent supply. A refinery cannot be sustained on erratic feedstock. Without stability, financing weakens, workforce morale declines, and community expectations are unmet,” he said.
Beyond supply concerns, he highlighted pricing challenges, explaining that current frameworks linked to international benchmarks do not reflect the realities of domestic refining. According to him, refiners require a predictable and transparent pricing structure capable of supporting long-term planning and attracting financing.
He also pointed to infrastructure constraints, saying losses between production and delivery continue to affect both upstream and downstream operations, adding that some refiners have invested in marine logistics, jetties, and pipelines to improve evacuation, but broader collaboration is needed to reduce inefficiencies.
henacho further observed that changes in the upstream landscape, particularly divestments by international oil companies, have altered the producer profile. He said indigenous operators often prioritise short revenue cycles, a trend he urged regulators to align with domestic energy security objectives through the enforcement of supply obligations.
He then presented key requests, including strict enforcement of domestic crude supply obligations, development of a standardised crude sales agreement framework, fair domestic pricing, infrastructure collaboration, and transparency in reporting allocations and deliveries. He also urged the regulator to align approvals for field development and export permits with compliance on domestic supply and to ring-fence volumes for smaller refineries.
On pricing, he said, “Current market structures tied to international benchmarks create a mismatch with domestic refining realities. We are not seeking a subsidy, but rather a transparent, predictable, and bankable pricing framework — one that reflects domestic logistics, operational costs, and long-term sustainability.”
He also stated, “A structured, NUPRC-supported COSPA (Crude Oil Sales and Purchase Agreement) template will unlock financing and ensure viability across the refining ecosystem.”
Highlighting infrastructure concerns, he said, “Significant volumes are lost between production and delivery, while downstream operators face additional inefficiencies in logistics and evacuation.”
He concluded by emphasising collaboration, saying, “These requests are made in the spirit of partnership and shared responsibility. We remain fully committed to working with the Nigerian Upstream Petroleum Regulatory Commission to translate Nigeria’s crude resources into domestic value, jobs, and sustainable economic growth.”
Responding, the NUPRC boss was said to have encouraged members of CORAN to consider participating in oil block bid rounds as a strategic option for securing affordable crude feedstock for their refineries.
Briefing our correspondent about the outcome of the meeting, CORAN spokesperson Eche Idoko stated that greater participation of indigenous refiners in upstream asset ownership would help create more stable and commercially viable crude supply arrangements while also deepening local participation across the petroleum value chain.
Idoko quoted Eyesan as assuring members of CORAN that Nigeria has sufficient crude resources to support domestic refining ambitions and reiterated the commission’s commitment to promoting policies that prioritise in-country value addition.
“She therefore encouraged refinery operators to enter into long-term crude supply contracts with producers as a practical mechanism for ensuring predictable feedstock availability, operational planning, and pricing stability.
“The NUPRC chief, however, acknowledged that infrastructure limitations remain a key challenge to seamless crude supply to local refineries. She identified issues such as inadequate pipeline networks, evacuation bottlenecks, storage constraints, marine logistics, and other supply chain gaps as areas requiring urgent investment and coordinated action,” Idoko told our correspondent.
The meeting is described as another step in ongoing engagements between regulators and private refinery operators aimed at unlocking the full potential of Nigeria’s downstream petroleum sector.
SOURCE: PUNCH NEWS PAPER
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