The Crude Oil Refinery Owners Association of Nigeria has urged the Federal Government to urgently strengthen the domestic refining industry and reduce the country’s dependence on imported petroleum products.
The association made the call in a position paper titled “Position Paper on the Urgent Need for Strategic Government Intervention to Strengthen Nigeria’s Domestic Refining Industry,” while citing the recent intervention by United States President Donald Trump in the American refining sector as a lesson for Nigeria.
It argued that Nigeria had an even stronger case for government intervention because local refinery operators faced foreign-exchange pressures, high borrowing costs, limited access to long-tenor financing, crude supply challenges, inadequate infrastructure, and high logistics costs.
“It is sound industrial policy. It is an energy-security policy. And ultimately, it is economic policy,” the association stated
The group expressed concern that Nigeria, despite being one of Africa’s largest crude oil producers, continued to experience difficulties in supplying crude to domestic refineries on commercially workable terms.
It said that during the first quarter of 2026, 61.9 million barrels were allocated to domestic refineries while producers offered 68.7 million barrels, but only 28.5 million barrels were actually delivered.
According to the association, the Nigerian Upstream Petroleum Regulatory Commission identified pricing gaps between producers and domestic refiners as one of the major reasons crude offered did not translate into completed transactions.
It, however, acknowledged improvements in the second quarter, saying NUPRC reported that 53.7 million barrels of crude oil and condensate were supplied to local refineries, representing reported Domestic Crude Supply Obligation performance of 97.4 per cent.
“CORAN acknowledges and commends this improvement,” it stated. The association, however, stressed that crude allocation alone was insufficient, noting that refineries required crude delivered under commercially sustainable conditions.
“A refinery does not consume an allocation on paper. It consumes crude delivered under commercially sustainable terms,” CORAN stated. It called for greater consideration of pricing, transportation, evacuation infrastructure, crude quality, financing, payment arrangements and proximity to producing assets when determining crude supply arrangements.
The refinery owners also called for a commercially sensible pricing template for crude supplied to domestic refineries. They acknowledged that international benchmarks such as Brent, WTI and Platts were useful market references but argued that they should not be applied mechanically where refiners were also required to bear separate evacuation and logistics costs.
The association proposed a Domestic Refinery Crude Pricing Framework that would consider internationally recognised crude benchmark values, quality differentials, the actual point of delivery, avoided international freight and insurance costs, domestic evacuation and logistics costs, proximity between producing fields and refineries, as well as reasonable commercial margins for producers.
“The objective is not subsidised crude. The objective is correctly priced crude,” CORAN stated. The refinery owners also expressed concern over the resurgence of petroleum-product imports, urging the government to ensure imports increasingly serve only as a mechanism for addressing supply gaps.
They cited NMDPRA data showing that domestic PMS supply fell from approximately 32.5 million litres per day in June 2026 to 25.8 million litres per day in July, while petrol imports rose from about 18.1 million litres to 19.7 million litres per day.
The association said Nigeria needed adequate petroleum-product stocks and was not advocating policies that could create artificial shortages. However, it warned that a continuous import regime alongside growing domestic refining investment could weaken incentives for existing and prospective refineries.
“A continuous import regime existing alongside substantial domestic refining investment exports Nigerian jobs and refining margins, places additional demand on foreign exchange, weakens investment incentives for existing and prospective refineries, exposes Nigeria to international freight disruptions and geopolitical shocks, and ultimately undermines the country’s aspiration to become a petroleum-product refining and export hub,” it stated.
The group called for import licences to increasingly be calibrated against independently verified domestic production and supply gaps. It added that domestic production capable of meeting equivalent specifications and commercial requirements should receive priority in the Nigerian market.
The association identified access to finance as one of the biggest constraints facing Nigeria’s emerging refining industry. It said refineries were capital-intensive projects requiring substantial investment in processing units, storage facilities, utilities, pipelines, loading facilities, environmental infrastructure, laboratories, fire-protection systems and working capital.
It further urged the government to treat refineries as industrial infrastructure rather than merely downstream petroleum businesses. “Every barrel refined within Nigeria has the potential to retain economic value that would otherwise leave the country,” it stated.
According to the association, domestic refining supports employment, engineering services, fabrication, transportation, petrochemicals, lubricants, plastics, construction materials and other industries while conserving foreign exchange.
It called for a network of large, medium-sized and modular refineries strategically distributed around producing basins and major consumption centres. “The success of one refinery should not mark the completion of Nigeria’s refining ambition. Nigeria requires an ecosystem,” CORAN stated.
To address the challenges, CORAN called on the Federal Government to convene an urgent Presidential Refining Industry Roundtable involving the association, NUPRC, NMDPRA, NNPC Limited, crude producers, financial institutions, infrastructure investors and relevant government ministries.
The association proposed 10 priority actions, including the full institutionalisation of naira-for-crude, development of a domestic crude pricing template, stronger enforcement of the Domestic Crude Supply Obligation under Section 109 of the Petroleum Industry Act and increased use of crude swaps.
It also called for the progressive reduction of petroleum-product imports, creation of a refinery development financing framework, development of shared petroleum-product infrastructure and establishment of strategic petroleum-product reserves.
The group further proposed regulatory and fiscal incentives for refinery expansion, particularly investments in conversion units capable of increasing domestic production of PMS, AGO, aviation fuel and LPG.
“Government intervention should therefore increasingly move away from subsidising consumption and toward enabling production,” it stated. The association added, “Support the refinery. Support the pipeline. Support the storage terminal. Support access to commercially priced Nigerian crude. Support long-term industrial finance.”
CORAN said Nigeria should ultimately become a refining hub for Africa. “Nigeria should not continue exporting crude, exporting jobs and importing the same petroleum products at considerable economic cost.
“Our crude must increasingly power our refineries. Our refineries must increasingly supply our market. And Nigeria must ultimately become a refining hub for Africa. That should be the destination of petroleum-sector reform,” the association stated.
SOURCE: PUNCH NEWS PAPER
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