The Crude Oil Refinery Owners Association of Nigeria has called for stronger government support for local refineries, warning that continued dependence on imported petroleum products could undermine investment in Nigeria’s refining sector.
In a position paper issued on Thursday, the association urged the Federal Government to introduce measures that would make domestic refining more viable and reduce the need for imported fuel.
CORAN referenced recent efforts by United States President Donald Trump to support the country’s refining industry, saying Nigeria also had compelling reasons to adopt strategic measures to protect and develop its domestic refining capacity.
The group said Nigerian refiners were being held back by several challenges, including foreign exchange difficulties, costly financing, inadequate long-term credit, problems accessing crude oil, weak infrastructure and high logistics expenses.
“It is sound industrial policy. It is energy-security policy. And ultimately, it is economic policy,” the association stated.
According to CORAN, Nigeria’s large crude oil production has not translated into reliable crude supplies for local refineries because producers and refiners continue to face difficulties reaching workable commercial agreements.
The association said figures from the first quarter showed that although 61.9 million barrels were allocated to domestic refineries and 68.7 million barrels were offered by producers, actual deliveries stood at only 28.5 million barrels.
It attributed much of the gap to disagreements over pricing, noting that the Nigerian Upstream Petroleum Regulatory Commission had previously identified differences between producer and refiner price expectations as a major obstacle.
Crude deliveries improved during the second quarter, CORAN said, citing NUPRC figures showing that 53.7 million barrels of crude oil and condensate were supplied to local refineries. The reported Domestic Crude Supply Obligation performance during the period stood at 97.4 per cent.
“CORAN acknowledges and commends this improvement,” it stated.
Despite the progress, the association said meeting crude allocation targets on paper would not be enough unless refiners could obtain the commodity at commercially viable terms.
“A refinery does not consume an allocation on paper. It consumes crude delivered under commercially sustainable terms,” CORAN stated.
It recommended that future crude supply arrangements take account of the cost of transportation, evacuation facilities, crude quality, financing and payment conditions, as well as the distance between oil-producing fields and refineries.
The association also proposed a new pricing mechanism for crude supplied to domestic refineries.
It said global benchmarks such as Brent, WTI and Platts should remain reference points but argued that pricing should also reflect domestic costs incurred in moving crude to refineries.
Under its proposed Domestic Refinery Crude Pricing Framework, factors including crude quality, delivery location, avoided international freight and insurance expenses, local evacuation costs, proximity to producing fields and reasonable producer margins would be considered.
“The objective is not subsidised crude. The objective is correctly priced crude,” CORAN stated.
The refinery owners further raised alarm over the increase in fuel imports despite growing domestic refining investments.
They cited NMDPRA figures showing that local PMS supply declined from around 32.5 million litres per day in June to 25.8 million litres in July, while daily petrol imports increased from approximately 18.1 million litres to 19.7 million litres.
CORAN said it recognised the need to maintain sufficient fuel availability and was not advocating measures that could lead to shortages. However, it warned that allowing imports to remain high could make it harder for domestic refineries to attract and sustain investment.
“A continuous import regime existing alongside substantial domestic refining investment exports Nigerian jobs and refining margins, places additional demand on foreign exchange, weakens investment incentives for existing and prospective refineries, exposes Nigeria to international freight disruptions and geopolitical shocks, and ultimately undermines the country’s aspiration to become a petroleum-product refining and export hub,” it stated.
The association therefore urged authorities to link import licences more closely to verified gaps in domestic supply.
It also said locally produced petroleum products that meet required standards and commercial conditions should be prioritised over imported alternatives.
CORAN identified access to affordable, long-term funding as another major problem for refinery developers. It noted that building and operating refineries requires huge investments in processing equipment, storage, pipelines, utilities, loading facilities, environmental systems, laboratories, fire protection and working capital.
The association urged the government to view refineries as strategic industrial assets capable of supporting broader economic development.
“Every barrel refined within Nigeria has the potential to retain economic value that would otherwise leave the country,” it stated.
It said stronger domestic refining would generate employment and support businesses involved in engineering, fabrication, transport, petrochemicals, lubricants, plastics and construction, while reducing the amount of foreign exchange spent on imported petroleum products.
CORAN also advocated the development of several categories of refineries, from large-scale plants to medium-sized and modular facilities, located close to crude-producing regions and major consumption centres.
“The success of one refinery should not mark the completion of Nigeria’s refining ambition. Nigeria requires an ecosystem,” CORAN stated.
To push the proposed reforms forward, the association called for a Presidential Refining Industry Roundtable involving regulators, crude producers, financial institutions, infrastructure investors, refinery operators and relevant government agencies.
It outlined 10 priority measures, including wider implementation of naira-for-crude arrangements, a domestic crude pricing framework, stronger enforcement of the Domestic Crude Supply Obligation under the Petroleum Industry Act and greater use of crude swaps.
Other proposals included gradually scaling down fuel imports, creating dedicated financing options for refinery projects, developing shared infrastructure for petroleum products and establishing strategic fuel reserves.
CORAN also asked for fiscal and regulatory incentives to encourage refinery expansion, particularly facilities capable of increasing local supplies of petrol, diesel, aviation fuel and LPG.
“Government intervention should therefore increasingly move away from subsidising consumption and toward enabling production,” it stated.
The association added, “Support the refinery. Support the pipeline. Support the storage terminal. Support access to commercially priced Nigerian crude. Support long-term industrial finance.”
CORAN said the ultimate goal should be for Nigeria to become a major refining and petroleum-product supply centre for Africa.
“Nigeria should not continue exporting crude, exporting jobs and importing the same petroleum products at considerable economic cost.
“Our crude must increasingly power our refineries. Our refineries must increasingly supply our market. And Nigeria must ultimately become a refining hub for Africa.”
“That should be the destination of petroleum-sector reform,” the association stated.
