morganable business/energy& industry
According to the association, Nigeria’s situation presents an even stronger case for government action, given the multiple structural challenges confronting local refiners.
KaNo—
The Crude Oil Refinery Owners Association of Nigeria (CORAN) has called on the Federal Government to take urgent and strategic steps to strengthen the country’s domestic refining capacity and reduce its dependence on imported petroleum products.
The association made the appeal in a position paper released on Thursday, titled “Position Paper on the Urgent Need for Strategic Government Intervention to Strengthen Nigeria’s Domestic Refining Industry.”
In the document, CORAN stressed that Nigeria must adopt deliberate policies that prioritise local refining, citing global examples, including recent intervention measures in the United States refining sector, as a guide.
According to the association, Nigeria’s situation presents an even stronger case for government action, given the multiple structural challenges confronting local refiners.
These include foreign exchange constraints, high borrowing costs, inadequate access to long-term financing, crude supply bottlenecks, poor infrastructure and elevated logistics expenses.
“It is sound industrial policy. It is energy-security policy. And ultimately, it is economic policy,” CORAN stated, underscoring the broader implications of strengthening domestic refining for national development.
CORAN Expresses Concern Over Nigeria’s Struggle To Supply Crude
Despite being one of Africa’s largest crude oil producers, CORAN expressed concern that Nigeria continues to struggle with supplying crude oil to its domestic refineries under commercially viable conditions.
The group highlighted significant discrepancies between crude oil allocation and actual delivery.
Data cited by the association showed that in the first quarter of 2026, about 61.9 million barrels of crude oil were allocated to domestic refineries, while producers offered 68.7 million barrels.
CORAN attributed this shortfall partly to pricing disagreements between producers and refiners.
NUPRC Identifies Pricing Gaps
It noted that the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) had identified pricing gaps as a key factor hindering the completion of crude transactions.
While acknowledging some improvements in the second quarter, the association noted that NUPRC reported the supply of 53.7 million barrels of crude oil and condensate to local refineries, representing a 97.4 per cent performance under the Domestic Crude Supply Obligation.
“CORAN acknowledges and commends this improvement,” the association stated, while cautioning that crude allocation figures alone do not guarantee operational efficiency for refineries.
“A refinery does not consume an allocation on paper. It consumes crude delivered under commercially sustainable terms,” the statement added.
To address these concerns, CORAN called for a more comprehensive approach to crude supply arrangements, one that considers pricing structures, transportation logistics, infrastructure availability, crude quality, financing conditions and proximity between production fields and refining facilities.
Central to its recommendations is the development of a Domestic Refinery Crude Pricing Framework.
The proposed pricing framework would factor in global benchmark prices, quality differentials, delivery points, avoided international freight and insurance costs, domestic logistics expenses, and reasonable profit margins for crude producers.
“The objective is not subsidised crude. The objective is correctly priced crude,” CORAN emphasised.
In addition to crude supply issues, the association raised concerns over the resurgence of petroleum product imports, warning that an unchecked import regime could undermine the growth of local refining investments.
Citing data from the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), CORAN noted that domestic supply of Premium Motor Spirit (petrol) declined from about 32.5 million litres per day in June 2026 to 25.8 million litres per day in July.
While acknowledging the need for sufficient fuel supply to meet national demand, CORAN stressed that imports should only serve as a stop-gap measure to address temporary supply gaps rather than a long-term strategy.
“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,” the association warned.
CORAN Recommend Import Licenses
To ensure a balanced approach, CORAN recommended that import licences should be calibrated against independently verified domestic production and supply gaps.
It also urged the government to prioritise locally refined products that meet required specifications and commercial standards.
Access to finance remains another major hurdle for the sector.
CORAN described refining as a capital-intensive industry requiring significant investment in processing units, storage facilities, pipelines, utilities, safety systems, laboratories and working capital.
The association urged the government to reclassify refineries as critical industrial infrastructure rather than merely downstream petroleum businesses, noting that such a shift would improve access to financing and policy support.
“Every barrel refined within Nigeria has the potential to retain economic value that would otherwise leave the country,” CORAN said.
To build a resilient refining ecosystem, CORAN called for the development of a network of large-scale, medium-sized and modular refineries strategically located across 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,” the association stated.
As part of its policy proposals, CORAN urged the Federal Government to convene an urgent Presidential Refining Industry Roundtable involving key stakeholders such as NUPRC, NMDPRA, the Nigerian National Petroleum Company Limited, crude producers, financial institutions and infrastructure investors.
The association outlined 10 priority actions, including full institutionalisation of the naira-for-crude policy, development of a domestic crude pricing template, stricter enforcement of the Domestic Crude Supply Obligation under the Petroleum Industry Act, and increased utilisation of crude swap arrangements.
Other recommendations include the gradual reduction of fuel imports, establishment of a dedicated refinery financing framework, expansion of shared petroleum infrastructure and creation of strategic petroleum product reserves.
CORAN also advocated targeted regulatory and fiscal incentives to support refinery expansion, particularly investments in advanced processing units capable of boosting domestic production of petrol, diesel, aviation fuel and liquefied petroleum gas.
In conclusion, the association urged the government to shift its focus from subsidising consumption to enabling production, arguing that such a transition is critical for Nigeria’s long-term energy security and economic sustainability.
“Government intervention should therefore increasingly move away from subsidising consumption and toward enabling production,” CORAN stated.
