Nigeria’s drive to expand domestic refining capacity could be undermined by inadequate crude oil supply and the high cost of accessing feedstock, industry operators have warned.
The Crude Oil Refinery-Owners Association of Nigeria (CORAN) and the Independent Petroleum Producers Group (IPPG), speaking separately at the third Nigeria Oil Refining Summit (NORS 2026) in Lagos, called for urgent measures to ensure that growing domestic refining capacity is matched by adequate crude production and commercially viable supply arrangements.
While CORAN focused on making crude available to domestic refineries at sustainable commercial terms, IPPG warned that Nigeria must significantly increase oil production to prevent refineries from competing for a limited pool of crude.
The two groups said the success of Nigeria’s refining ambitions ultimately depended on connecting the upstream sector, where crude is produced, with the expanding downstream refining capacity.
CORAN chairman, Mr Momoh Oyarekhua, said the paradox of Nigeria possessing abundant crude reserves while some domestic refineries struggled to secure feedstock on commercially viable terms should be resolved.
He said local refining was transforming the country’s fuel supply landscape, but the gains could be undermined if refineries are unable to obtain sufficient crude at prices and under conditions that support sustainable operations.
Oyarekhua proposed the full institutionalisation of the naira-for-crude policy, with transparent eligibility and access for qualifying domestic refineries, including modular plants.
He also called for a domestic crude pricing template that would take into account crude quality, delivery points, avoided international logistics costs and actual domestic evacuation expenses.
According to him, such a framework will provide more realistic commercial terms for domestic crude transactions and reduce uncertainty for refiners.
CORAN also demanded stronger enforcement of the Domestic Crude Supply Obligation (DCSO) under Section 109 of the Petroleum Industry Act, alongside workable commercial arrangements between crude producers and refiners.
The association proposed crude swaps and proximity-based supply arrangements under which crude-producing assets located near refineries could supply those facilities without unnecessary movement through distant export infrastructure.
Meanwhile, IPPG chairman, Mr Adegbite Falade, warned that the rapid expansion of Nigeria’s refining capacity could outstrip the country’s available crude production.
Falade, who delivered the opening keynote at NORS 2026, said domestic refineries could require more than 1.5 million barrels of crude oil per day in the medium term, depending on refinery rehabilitation, expansion and the commissioning of additional modular plants.
He said the projected requirement would approach Nigeria’s current liquids production of about 1.68 million barrels per day as of August 2026, leaving limited room for exports and other crude commitments.
‘Nigeria cannot refine barrels that are not produced. The answer to rising domestic refining demand is not merely to redistribute a limited pool of crude. The answer is to create more barrels,’ he said.
Falade therefore called for increased investment in exploration and field development, improved access to capital, accelerated development of marginal fields and policies capable of making Nigeria more competitive for upstream investment.
He said Nigeria had sufficient hydrocarbon reserves to support increased production, putting crude oil and condensate reserves at about 37.01 billion barrels as of January 1, 2026.
The challenge, he said, was converting those reserves into actual production and ensuring that the crude could be delivered reliably to domestic refineries.
‘The challenge, therefore, is not whether the hydrocarbons exist underground. It is whether we can convert reserves into production, production into secure supply, and secure supply into domestic refining competitiveness,’ Falade said.
He identified capital, fiscal stability, security, infrastructure, regulatory certainty and bankable commercial terms as critical to unlocking new production.
Falade also warned that increased refinery demand could leave Nigeria with a narrow production margin for export commitments, government revenue requirements, crude-backed financing, joint-venture partner offtake and production outages.
He urged the Federal Government and regulators to place upstream production at the centre of the country’s refining strategy.
Beyond crude availability, CORAN called for a Refinery Development Financing Framework to provide long-term financing, guarantees and refinancing mechanisms for new refineries and capacity expansion.