…Proposed arrangement could save local refiners $4 per barrel as Nigeria records five consecutive months of meeting oil production quota
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) is considering a domestic crude oil swap arrangement that could reduce transportation costs for local refineries by an estimated $3 to $4 per barrel.
The proposed framework is intended to make crude oil supplies more efficient by allowing refiners to obtain suitable crude from nearby production or export points rather than transporting allocated grades over long distances.
NUPRC Chief Executive, Oritsemeyiwa Eyesan, disclosed the initiative during the OTL Africa Downstream Energy Week 2026 in Lagos, where she outlined regulatory efforts to improve crude supply and strengthen the domestic refining industry.
Under the proposed arrangement, a refinery could receive crude from the nearest suitable source, potentially reducing the cost associated with transporting crude across the country.
The commission is consulting oil producers, refiners and other industry stakeholders on the framework.
Domestic refineries receive 127 million barrels
Eyesan said domestic refineries received more than 127 million barrels of Nigerian crude oil and condensate between January and September 2026.
The deliveries reflect improvements in the implementation of the Domestic Crude Supply Obligation (DCSO), following regulatory interventions to resolve commercial disagreements between producers and refiners that disrupted supplies during the first quarter.
However, the latest figures also highlight continuing challenges in matching domestic refining demand with available crude supplies.
Industry stakeholders have repeatedly identified crude availability, pricing arrangements and transportation infrastructure as important factors affecting the competitiveness of Nigeria’s expanding refining industry.
A crude swap arrangement could help address the logistics component of the problem, although its ultimate impact will depend on the terms of implementation and the availability of suitable crude.
Production improves
Nigeria recorded average production of 1.717 million barrels per day of crude oil and condensate in September, representing a 2.34 per cent increase over August.
Crude oil production alone averaged 1.53 million barrels per day, exceeding Nigeria’s Organisation of the Petroleum Exporting Countries quota of 1.5 million barrels per day.
September marked the fifth consecutive month in which the country met or exceeded its crude oil production quota.
The NUPRC attributed the improvement to better asset integrity, stronger security around evacuation infrastructure, improved collaboration with operators and efforts to restore previously shut-in production.
Licensing round under scrutiny
Eyesan also said the 40 oil and gas blocks offered in the 2026 licensing round would undergo a transparent evaluation process, with published criteria and mandatory disclosure of beneficial ownership.
She added that the commission was enforcing the drill-or-drop principle to discourage investors from holding licences without developing the associated assets.
According to her, 22 recent awardees are expected to contribute at least 250,000 barrels per day within five years.
The proposed crude swap framework comes as Nigeria seeks to increase production, improve domestic refining and ensure that gains in the upstream petroleum industry translate into tangible benefits for the wider economy.
