The Crude Oil Refinery-owners Association of Nigeria (CORAN) has called on the Federal Government to consider supporting local refineries with production and processing assets to help them thrive.
The call was made by CORAN Publicity Secretary, Eche Idoko, in an exclusive interview with Nairametrics.
Idoko noted that local refineries currently struggle with crude oil supplies due to several factors including Nigeria’s inadequate production and insufficient investment in the upstream and downstream sectors.
He lamented that “just very few (local) refineries” have been able to get crude supplies from the Nigerian National Petroleum Company Limited under the Naira-for-crude arrangement approved by the Federal Executive Council last year.
Nairametrics reported that the national oil company failed to meet the supply obligations in the arrangement which is to sell 450,000 barrels per day of crude oil to local refineries in Nigeria.
Speaking on the supply woes of local refineries, Idoko told Nairametrics that many local refineries are faced with the burden of sourcing feedstock all by themselves, with little or no incentives from the government.
“NNPC, as you know, is now a fully private company. It is a limited liability company, and they are now in for profit. So, they sell crude to whoever they are willing to sell to.
“NNPC has not been able to supply many of the modular refineries that are within our association, apart from the arrangement they had with Dangote. So, all the private refineries have had to source for crude.
“Conversations are going on with the federal government to see how they can help the private refineries source crude for their local refineries. But what holds sway right now is that all the private refineries that operate in the country have had to source for crude from personal private arrangements, most of them from domestic producers,” he clarified.
Nigeria not producing enough
The CORAN Spokesperson noted that even if the NNPCL wishes to assist local refineries in getting crude oil supplies, Nigeria is not producing enough to meet these demands in addition to its exports for revenue.
“Rather than say NNPC should provide crude to local refineries, the question is is the country producing enough crude to meet the demands?”
He noted that investments in the downstream sector are improving but the government must ramp up production to meet the demands of local refineries.
“With the whole conversation around energy transition happening in the West, and then we see a lot of divestments by the IOCs. We have seen a drastic reduction in production and investment in production, which is a problem.”
What the government must do
Idoko urged the government to prioritise increasing crude oil production and in addition, support local refineries with assets and easy access to feedstocks (crude oil).
“It is the position of our association that we want to see this administration also aggressively drive investment in production specifically with the local refineries in mind in the coming years.
“We have seen the incoming president of the US, declaring that their country is going to produce. We want to see that here too, where the minister of petroleum, who incidentally is the president of Nigeria, would also make pronouncements that would boost confidence in investors in the oil production sector so that we in the local refineries can have access to crude,” he explained.
He added that the government can invest in production and refining assets on behalf of private companies as such would help them thrive better.
What you should know
- The latest data from OPEC shows that Nigeria produced an average of 1.48 million barrels of crude oil per day in 2024. This is an improvement from the previous year but still a little shy of the 1.5 million bpd quota allocated to it by the oil cartel.
- Meanwhile, President Bola Tinubu has pledged to increase oil production to above 2.6 million bpd by the end of 2025.
- It is uncertain if this target will be achieved as the challenges facing the oil industry, such as crude oil theft, vandalism, and low investment, persist.
