Uche Cecil Izuora
Local refiners have called on government to improve its oil production to meet local increasing demand of feedstock by local refineries.
The issue was raised by critical stakeholders at the 3rd Nigeria Oil Refining Summit (NORS) 2026, with the theme “Refining For Value: Linking Upstream Supply To Downstream Demand “.in Lagos on Monday.
The Chairman, the Independent Petroleum Producers Group (IPPG), Adegbite Falade, set the tone for conversation by noting that in the medium term, Nigeria is moving towards a
situation in which domestic refineries could require more than 1.5 million barrels of
crude per day, depending on rehabilitation progress, expansion activities, operating rates and the commissioning of more modular refineries.
Falade, who is also the Managing Director of Aradel Plc, said that it is not a marginal demand adjustment it is close to all of Nigeria’s current liquids output which stands at
1.68million barrels a day (BPD) as of August 2026 according to NUPRC’s August monthly
production report.
Compared to a few years ago, the recovery in production is
encouraging, he remarked but not yet sufficient to declare victory If domestic refinery demand rises towards 1.5 million BPD as forecasted while crude production remains around
1.6 million BPD.
According to him, the production system will have a very narrow margin for existing
export commitments; government revenue requirements; crude backed financing, JV
partner offtake, planned and unplanned production outages; OPEC production
commitments; grade mismatches; terminal and pipeline disruptions; and normal
operational flexibility.
He said this is why the upstream industry must be placed at the centre
of the refining conversation. According NUPRC’s published reserves position as of 1 January 2026 placed Nigeria’s
crude oil and condensate reserves at approximately 37.01 billion barrels, while natural
gas reserves stood at about 215.19 trillion cubic feet (TCF).
The challenge, he said is therefore,
not whether the hydrocarbons exist underground but is whether we can convert
reserves into production, production into secure supply, and secure supply into
domestic refining competitiveness.
That conversion requires capital, requires fiscal stability, security, infrastructure, regulatory certainty, bankable commercial
terms and above all, a shared understanding that the upstream and
downstream are not separate industries as they are one integrated value chain.
He commended regulatory bodies, producers and refiners
for the progress made so far in the implementation of the DSCO framework
established under Section 109 of the Petroleum Industry Act. According to recent
report from NUPRC, DCSO compliance rose to approximately 97.4 per cent in Q2 2026
from a performance of c. 41 eper cent in Q1 2026.
He said these achievements have also been
reinforced by the growing role of the IPPG – the umbrella body of 34 indigenous
Exploration and Production companies, which are now core participants in the petroleum industry.
“Today, IPPG member companies account for more than half of
Nigeria’s total oil and gas production. Put simply, the feedstock required to power
Nigeria’s refining sector will increasingly flow from our fields and terminals.” he said.
Falade, pointed out that the industry’s collective responsibility is to ensure that statutory policy continues to convert
into commercial reality.
He said Nigeria cannot refine barrels that are
not produced and rising domestic refining demand is not merely to
redistribute a limited pool of crude. “The answer is to create more barrels. That
means incentivising exploration, accelerating development activity, enabling
marginal field growth, improving access to capital and ensuring that Nigeria remains
competitive for upstream investment.” he added.
He siad Nigeria must protect and modernise evacuation infrastructure and the
progress made in reducing crude theft and pipeline sabotage must be protected.
According to him, Nigeria needs dedicated crude evacuation corridors,
secure pipelines, adequate terminal capacity, sufficient storage, functional jetties and
efficient marine logistics.
In addition, he said the country must build a true domestic crude market that must allow
aggregation of volumes from multiple producers, grade blending, transparent
swaps, substitutions among equivalent grades and efficient terminal delivery.
Earlier, Chairman of OPAC refinery and Chairman of Crude Oil Refineries Association of Nigeria (CORAN), Mr. Momoh Jimah Oyarekhua, noted that despite Nigeria’s abundant crude resources, some domestic refineries continue to face difficulties accessing crude oil on commercially viable terms. At the same time, fuel imports persist while local refining capacity remains underutilised.
Oyarekhua, remarked that refining for value means more than producing fuel but means retaining foreign exchange, creating jobs, developing local expertise, supporting petrochemicals and manufacturing, and capturing greater economic value within Nigeria.
To get the invest lmemt climate right, he said that CORAN is proposing full institutionalisation of Naira-for-Crude, with transparent eligibility and access for qualifying domestic refineries, including modular refineries.
The Association also called for domestic crude pricing template recognising crude quality, delivery point, avoided international logistics costs and actual domestic evacuation expenses.
In addition Oyarekhua, demanded for a strengthened enforcement of the Domestic Crude Supply Obligation under Section 109 of the Petroleum Industry Act while preserving workable commercial arrangements between producers and refiners.
He in addition sought for crude swaps and proximity-based supply arrangements that allow crude-producing assets located close to domestic refineries to supply those facilities without unnecessary transportation through distant export infrastructure.
The CORAN further called for progressive reduction of petroleum-product imports, with imports increasingly restricted to objectively determined domestic supply shortfalls and strategic-stock requirements.
He also urged for the creation of a Refinery Development Financing Framework providing long-tenor financing, guarantees and refinancing mechanisms for new refinery construction and capacity expansion and development of shared petroleum-product infrastructure, particularly pipelines, depots, storage terminals, jetties, rail evacuation and other common-carrier facilities.
He said the establishment of strategic petroleum-product reserves capable of cushioning temporary refinery shutdowns, maintenance periods and international supply disruptions have become very necessary.
The refinery group also called for regulatory and fiscal incentives for refinery expansion, particularly investment in conversion units capable of increasing domestic production of PMS, aviation fuel, LPG and other essential products.
The CORAN also urged for a clear domestic refining roadmap establishing national targets for refining capacity, domestic market share, petroleum-product imports and eventual export capacity.
Oyarekhua recognised that Nigeria has already taken the difficult decision to reform the petroleum-products market but the next stage must be equally bold.
“The country must now; Support the refinery. Support the pipeline. Support the storage terminals.
“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.” he added.
He however noted that achieving these objectives requires partnership among producers, regulators, refiners, marketers, financiers, host communities, and the media.