NIGERIA: Domestic supply falls to 45.1 million barrels as industry confronts widening gap between refining demand and crude availability
Crude oil deliveries to domestic refineries fell by approximately 16 per cent in the third quarter of 2026, raising fresh questions about the reliability of feedstock supplies as Nigeria expands its refining capacity.
Figures disclosed by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) showed that domestic refineries received 45.1 million barrels of crude oil and condensate in the third quarter, down from 53.7 million barrels in the second quarter.
The decline amounted to 8.6 million barrels, while performance under the Domestic Crude Supply Obligation (DCSO) dropped from 97.4 per cent in the second quarter to 76.2 per cent in the third.
The development presents a challenge for an industry increasingly expected to process more crude locally, reduce dependence on imported petroleum products and strengthen Nigeria’s energy security.
September deliveries also decline
The pressure on domestic supplies extended into September, when crude oil received by refineries fell by 6.3 per cent to 15.97 million barrels from 17.05 million barrels in August, according to figures reported by Leadership.
The supply decline occurred even as Nigeria’s overall crude production improved.
The country recorded average production of 1.717 million barrels per day of crude oil and condensate in September, up 2.34 per cent from August. Crude oil production, excluding condensates, averaged 1.53 million barrels per day.
The figures suggest that increased national production does not automatically translate into a corresponding increase in deliveries to domestic refineries.
The volume reaching individual refineries also depends on commercial agreements, pricing, crude allocation, transportation and evacuation arrangements.
The crude supply dilemma
The Domestic Crude Supply Obligation is intended to support local refining by requiring relevant producers to supply crude to Nigerian refineries under the applicable regulatory framework.
However, commercial disagreements between producers and refiners disrupted deliveries during the first quarter of the year, prompting regulatory intervention.
The NUPRC has said subsequent engagement with industry stakeholders helped improve deliveries in the second and third quarters, although the latest quarterly figures show that supply performance remains uneven.
A major issue is the relationship between the price producers can obtain in the export market and the price domestic refiners are prepared to pay.
The Petroleum Industry Act provides for commercial transactions based on willing-buyer, willing-seller principles, making pricing an important consideration in negotiations.
For refiners, inadequate or unpredictable feedstock supplies can complicate production planning, increase procurement costs and make it harder to maintain stable output.
A test for Nigeria’s refining ambitions
The supply figures come as the Dangote Petroleum Refinery expands its role in Nigeria’s petroleum products market and the country seeks to encourage additional domestic refining capacity.
The Independent Petroleum Producers Group and Dangote Group have previously identified predictable commercial terms, access to suitable crude and investment in pipelines and terminals as important requirements for the industry’s expansion.
The NUPRC is considering a domestic crude swap framework that could reduce transportation costs by an estimated $3 to $4 per barrel.
If properly implemented, the arrangement could improve logistics, although it would not by itself resolve every disagreement over pricing, crude allocation or payment terms.
For Nigeria, the central challenge is ensuring that rising production translates into dependable crude supplies for domestic refiners without undermining the commercial sustainability of producers.
Until that balance is achieved, increased refining capacity alone may not guarantee consistent domestic supply or eliminate the need for imported petroleum products.
