The Petroleum Products Retail Outlets Owners Association of Nigeria has raised concerns over the diversion of 500,000 barrels of crude oil allocated daily for domestic refineries, accusing oil producers of prioritizing foreign markets.
PETROAN made this claim while commending the Nigerian Upstream Petroleum Regulatory Commission for its decision to ban the exportation of crude oil allocated to local refineries.
According to the association, the policy will strengthen local refining capacity, reduce dependence on imported refined petroleum products, and ease pressure on the nation’s foreign exchange reserves.
The association’s Publicity Secretary, Joseph Obele, alleged that racketeering had been a key factor in the failure of domestic crude oil supply obligations, with oil producers choosing quick foreign exchange gains over supporting local refining efforts.
“The exportation of crude oil meant for domestic refining has led to the abandonment of local refineries. It has been a major racketeering scheme, with producers and traders prioritising quick foreign exchange proceeds over local refining. Approximately, 500,000 barrels of crude oil per day are allocated for domestic refining, but these volumes often find their way to the international market,” Obele said.
PETROAN emphasized that banning the export of domestic crude oil is expected to boost Nigeria’s economy by promoting local refining, which will stimulate the petrochemical and agricultural sectors, reduce income inequality, and help Nigeria evolve from a raw material exporter to a supplier of value-added products.
The association’s National President, Billy Gillis-Harry, called on the NUPRC to take swift action against defaulters, including refineries, cargo vessels, and companies that fail to comply with the policy.
He expressed confidence that the new directive would ensure adequate refined petroleum supply in Nigeria, ultimately leading to lower prices for consumers.
During a recent stakeholders’ meeting, which brought together more than 50 industry players, producers and refiners blamed each other for the lapses in implementing the domestic crude supply policy.
While producers argued that refiners failed to meet commercial and operational terms, refiners countered that producers consistently ignored supply agreements and preferred foreign markets, leaving local refineries struggling to secure feedstock.
When the Dangote Refinery began operations, it faced significant crude supply challenges, which led to months of conflict between crude producers and local refineries.
The President of Dangote Group, Alhaji Aliko Dangote, accused international oil companies of prioritizing Asian markets and sabotaging his refinery by withholding crude oil supply.
In response, the NUPRC directed upstream players to supply crude oil to Dangote and other local refineries. However, the Independent Petroleum Producers Group resisted, arguing that its members should not be compelled to sell crude to the Dangote Refinery or any other local facility.
Instead, the group called on the Nigerian National Petroleum Company Limited to utilize its statutory crude allocation to address the supply shortfall.
IPPG explained that while some of its members were already supplying crude oil to local refineries, forcing compliance through official letters, such as crude supply nominations from the Dangote Refinery for October 2024, conflicted with the “willing-buyer, willing-seller” framework stipulated in the Petroleum Industry Act 2021.
To resolve the crisis, President Bola Tinubu ordered that crude oil intended for domestic refining be sold to Dangote and other local refineries.
However, the naira-for-crude deal, which began in October, has yet to completely resolve the supply challenges.
Despite these issues, Dangote Refinery, with a 650,000-barrel-per-day capacity, is expecting a delivery of 12 million barrels of crude oil from the United States this month in an effort to stabilize operations.
