Crude oil producers in Nigeria offered an estimated $5.17bn worth of crude in the first quarter of 2026, but domestic refineries were only able to lift a fraction of the volumes made available. The gap highlights ongoing inefficiencies in the country’s refining ecosystem, despite regulatory efforts to boost local processing capacity.
Data released by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) shows that between January and March, producers made available 68.7 million barrels of crude oil—well above the 61.9 million barrels allocated to local refiners under the Domestic Crude Supply Obligation (DCSO). Yet, actual deliveries lagged significantly, with refiners lifting just 28.5 million barrels.
This reflects a weak conversion rate of roughly 36 to 46 per cent, pointing to persistent bottlenecks in Nigeria’s domestic crude supply chain. In practical terms, less than half of the crude earmarked for local refining was ultimately delivered, raising concerns about feedstock availability for the country’s refining ambitions.
In a statement, NUPRC’s Head of Media and Corporate Communications, Eniola Akinkuotu, said the figures demonstrate ongoing enforcement of the DCSO in line with the Petroleum Industry Act (PIA).
“The Nigerian Upstream Petroleum Regulatory Commission has released the statistics on the enforcement of the Domestic Crude Supply Obligation in accordance with the provisions of the Petroleum Industry Act,” the statement read.
“A summary of the monthly allocation shows that 61.9 million barrels of crude oil were allocated to domestic refineries during the quarter, while producers collectively offered a higher volume of 68.7 million barrels. However, actual supply to local refineries was 28.5 million barrels, translating to a supply conversion rate of 36-46 per cent as of the end of the first quarter (Q1) 2026.”
Akinkuotu noted that while producers have largely complied with supply targets, broader market conditions continue to limit actual deliveries.
“The commission has continued to enforce the provisions of the Domestic Crude Supply Obligation in accordance with the Petroleum Industry Act. While producers have demonstrated strong compliance by offering volumes above allocated thresholds in several instances, actual supplies to domestic refiners remain constrained by prevailing commercial dynamics,” he said.
A closer look at monthly figures reveals the scale of the disconnect. In January, producers exceeded their supply target by offering 25.3 million barrels against a required 22.6 million barrels—an increase of 11.9 per cent. However, only 9.2 million barrels were eventually delivered.
In February, allocations dipped slightly to 20.5 million barrels, while producers offered 19.8 million barrels, missing the target by about 700,000 barrels. Actual deliveries also fell marginally to 9.1 million barrels.
March showed some improvement, with deliveries rising to 10.1 million barrels. Producers offered 23.6 million barrels during the month—about 25.5 per cent above the allocated 18.8 million barrels—yet a significant portion still went undelivered.
In value terms, January’s crude offer stood at approximately $1.54bn, based on an average price of $68 per barrel. February followed with $1.39bn at $70 per barrel, while March surged to about $2.24bn as prices climbed to an average of $95.03 per barrel. Altogether, total offers for the quarter reached about $5.17bn.
Despite these substantial volumes, domestic refiners continue to face supply challenges. The disparity is particularly evident when compared to the scale of imports by the Dangote Petroleum Refinery, which sourced about 61.7 million barrels of crude from the United States between January 2024 and January 2026.
This reliance on imports persists even under the Federal Government’s naira-for-crude initiative, which was designed to prioritise local supply. The refinery has repeatedly cited insufficient domestic allocations, forcing it to turn to international suppliers, including the United States and Ghana, to maintain operations.
According to the NUPRC, the recurring shortfall between crude offered and crude delivered is largely driven by pricing disagreements. Transactions under the DCSO operate on a “willing buyer, willing seller” basis, meaning that commercial negotiations ultimately determine whether crude is lifted.
“The current framework allows for market-driven negotiations between producers and refiners. As such, pricing differentials have continued to influence the pace and volume of crude deliveries,” Akinkuotu explained.
Even so, the commission says it remains committed to improving supply flows to domestic refineries as part of Nigeria’s broader energy security strategy.
“Leveraging the framework of the Petroleum Industry Act, 2021, the Commission remains focused on sustaining recent gains in crude oil production while refining the DCSO methodology to enhance transparency and efficiency. Our objective is to ensure that domestic refineries are adequately supplied in line with national energy sufficiency goals,” the statement added.
The DCSO policy was introduced to reduce Nigeria’s dependence on imported petroleum products by ensuring local refineries have priority access to crude oil. However, the latest figures underscore the structural and commercial hurdles that continue to undermine the policy’s effectiveness, leaving the country’s refining ambitions only partially realised.
CORAN Blames Brent Premium for Dangote Refinery’s Foreign Sourcing
Even as Nigeria ramps up crude oil production and allocation to domestic refineries, operators on the ground say structural pricing issues and crude grade mismatches continue to push refiners toward international markets.
Industry stakeholders, particularly the Crude Oil Refiners Association of Nigeria (CORAN), argue that local refiners still face significant supply constraints—not necessarily due to lack of crude availability, but because of how it is priced and structured for sale.
CORAN’s Publicity Secretary, Eche Idoko, said the increasing reliance of the Dangote Petroleum Refinery on imported crude is rooted in commercial realities rather than weak domestic demand.
According to him, Nigerian crude—typically priced against the Brent benchmark—is often sold at a premium, making it less attractive compared to alternatives such as West Texas Intermediate (WTI), which the refinery frequently imports and finds more compatible with its configuration.
“So one of the major issues we are having with Dangote buying more crude from the U.S is because of the type of products offered and the pricing,” Idoko said.
“It is based on commercials. So producers sell more Brent crude at a premium, but the import from other countries is WTI, another grade that is utilised by the refinery.”
He explained that this pricing structure effectively puts domestic refiners at a disadvantage, forcing them to weigh higher local costs against potentially cheaper and more suitable international options. Beyond pricing, he noted that international sourcing also introduces additional considerations such as insurance and logistics risks—factors that could be better managed under a more locally adapted system.
Idoko called for a rethink of Nigeria’s crude pricing framework, suggesting that the country adopt a model tailored to its domestic refining realities, similar to what obtains in other oil-producing regions.
“All we have said is that for local refineries, in Nigeria, as they do in other climes, why can’t we have a pricing index that reflects our peculiarity, and we don’t have to face the international insurance risk,” he said.
“Dangote goes out to buy more crude from other countries because of the Brent and premium pricing template by local producers.”
He stressed that aligning crude pricing more closely with the needs of local refiners would not only improve competitiveness but also strengthen Nigeria’s internal supply chain and reduce dependence on imported feedstock.
The association is also reviewing recent data released by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), which highlighted gaps between crude allocated to domestic refiners and actual volumes lifted under the Domestic Crude Supply Obligation.
“On the figures released by the NUPRC, we are doing a compilation of the demand and volumes they all got so that we can respond robustly,” Idoko added.
The comments add to growing debate within the sector over the effectiveness of Nigeria’s crude allocation framework under the Petroleum Industry Act. While the policy was designed to prioritise domestic refining and reduce fuel imports, stakeholders say unresolved commercial and structural issues continue to limit its full impact.