Nigeria’s domestic refining sector has been rocked by a staggering disconnect between crude oil supply and actual refinery intake, with domestic refiners leaving an estimated 40.3 million barrels of crude oil unlifted in the first quarter of 2026 — a shortfall conservatively valued at $3.13 billion and equivalent to a supply conversion rate of just 36 to 46 percent, according to data released by the Nigerian Upstream Petroleum Regulatory Commission.
The figures lay bare the depth of the structural and commercial crisis undermining Nigeria’s much-publicised drive toward energy self-sufficiency. During the quarter, crude oil producers collectively offered 68.7 million barrels under the Domestic Crude Supply Obligation — well above the 61.9 million barrels formally allocated to domestic refineries — yet actual deliveries stood at only 28.5 million barrels. In January alone, producers offered 25.3 million barrels but refiners lifted just 9.2 million, leaving 16.1 million barrels — worth approximately $1.09 billion — unlifted. The pattern repeated in February and March, with combined shortfalls of a further $749 million and $1.28 billion respectively, as refiners consistently failed to convert available crude into production.
The NUPRC has attributed the persistent gap to a trio of interlocking problems: pricing disputes between producers and refiners, crude grade mismatches between what is offered and what refineries can process, and the structural weakness of the current ‘willing buyer, willing seller’ framework, which leaves the DCSO subject to commercial negotiation rather than binding enforcement. The Commission’s Head of Media and Corporate Communications, Eniola Akinkuotu, said the data reflects ongoing efforts to enforce the supply obligation in line with the Petroleum Industry Act — acknowledging that enforcement has so far fallen short of its intended impact.
The Crude Oil Refiners Association of Nigeria offered a blunt explanation for one of the most politically sensitive aspects of the crisis: why the Dangote Petroleum Refinery — Africa’s largest — is sourcing a growing share of its feedstock from the United States rather than from Nigerian fields. CORAN Publicity Secretary Eche Idoko said the preference for imported crude is driven by economics and product compatibility, not a lack of availability. Nigerian producers sell Brent-linked crude at a premium, while the refinery has shown a preference for West Texas Intermediate crude that better matches its operational configuration. “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?” Idoko said, calling for a bespoke domestic pricing benchmark that aligns supply incentives with the realities of Nigeria’s refining infrastructure. Industry experts warn that without urgent reform to pricing frameworks and crude grade alignment, the DCSO will continue to fail on paper — leaving billions in potential value stranded while Nigeria’s refining ambitions remain structurally underfunded.
Source: Punch Nigeria