NIGERIA’S upstream oil regulator has announced that it will deny export permits to oil producers failing to meet local supply obligations, including allocations to Dangote Refinery, the largest refinery in Africa.
This move enforces provisions of the Petroleum Industry Act (PIA), which requires international and domestic oil companies to prioritise crude supply to Nigerian refineries before exporting.
However, oil producers have resisted compliance, arguing that local refiners are not offering competitive prices. This dispute has prompted Dangote Refinery and other refiners to call on the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) to strictly enforce the law.
According to Reuters, the announcement comes after a high-level meeting between oil producers and refinery operators, where both sides blamed each other for failing to uphold supply agreements.
Regulator warns against exporting crude destined for local use
In a statement issued on Monday, NUPRC’s head, Gbenga Komolafe, reaffirmed that oil companies must comply with their domestic crude supply obligations or face export permit restrictions.
‘The diversion of crude cargo designated for domestic refineries is a contravention of the law, and the Commission will henceforth disallow export permits for designated crude cargoes for domestic refining,’ Komolafe warned.
The regulator’s statement, first reported by Reuters, follows concerns raised by refinery operators, including Dangote Refinery, which has argued that producers are not meeting their supply obligations.
However, oil producers countered, stating that local refiners are offering uncompetitive prices, forcing them to seek more profitable export markets.
Nigeria’s 2025 domestic crude demand
For the first half of 2025, Nigerian refineries project a daily crude demand of 770,500 barrels per day (bpd).
According to the NUPRC schedule, Dangote Refinery alone is expected to require 550,000 bpd, while other domestic refineries will require an additional 220,500 bpd.
Ensuring sufficient crude supply to domestic refineries is critical for reducing Nigeria’s reliance on fuel imports, which have long been a drain on foreign reserves and economic stability.
Tensions between oil producers and refiners
The dispute over crude supply pricing has created a stand-off between oil producers and refiners, raising key industry challenges:
- Can Nigerian refineries offer globally competitive prices to oil producers?
- Will restricting exports hurt foreign investment in Nigeria’s oil sector?
- How will enforcement affect the balance between domestic fuel supply and oil revenues?
According to Reuters, oil producers argue that compulsory domestic supply should not come at a financial loss, while refiners maintain that producers are failing to support the country’s refining industry.
The Dangote Refinery, a $19bn project, is expected to transform Nigeria’s fuel industry. However, without a clear pricing structure and consistent crude supply, its impact could be delayed or weakened.
With export bans looming, will oil producers and refiners find common ground, or will government intervention reshape Nigeria’s oil sector?
