The Federal Government has announced a ban on the export of crude oil designated for local refineries, aiming to strengthen Nigeria’s refining capacity, reduce dependency on imported petroleum products, and ease pressure on the nation’s foreign exchange.
Up until now, around 500,000 barrels per day of crude oil that should have been processed locally were being diverted to the international market as some producers sought quick foreign currency earnings. To tackle this, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has issued a firm warning that it will no longer approve export permits for crude oil intended for domestic use.
In a letter sent to oil producers and their partners, NUPRC’s Chief Executive Officer, Engr. Gbenga Komolafe, emphasized that any changes to cargoes meant for local refineries must receive prior approval from the commission’s head. The message is clear: violating the Domestic Crude Supply Obligation (DCSO) policy will lead to severe regulatory actions.
A meeting held last weekend, involving over 50 key stakeholders in Nigeria’s oil sector, revealed a tense back-and-forth between refiners and producers. Refineries accused producers of not meeting supply agreements and prioritizing exports, while producers argued that local refineries often failed to meet commercial and operational terms, forcing them to find alternate markets.
Despite the blame game, both sides acknowledged that the NUPRC has taken steps to ensure the smooth enforcement of the law. Komolafe stressed that any deviation from the agreement will be met with strict regulatory actions, and urged refiners to adopt international best practices in procurement and operations.
This move is part of a broader government initiative to prioritize domestic refining. The Naira-for-Crude program, launched alongside these measures, will ensure that crude oil is sold to local refineries in naira, with refined products then sold to local marketers in the same currency.
The NUPRC’s recent report also highlighted the need for significant daily crude allocations to refineries. Refineries like Dangote, Port Harcourt, Warri, and others are set to require a combined total of 770,500 barrels per day for the first half of 2025. The government is confident that these new policies will ensure adequate supplies to meet the refineries’ needs.
As the country strives to strengthen its energy security, the government’s strategy aims not only to increase refining capacity but also to reduce reliance on imported products, thereby boosting Nigeria’s economy and creating jobs.
In light of these developments, industry leaders are optimistic that the ban could benefit both local refineries and the Nigerian economy, especially if the government can maintain enforcement and address the operational challenges facing both producers and refiners.
While some experts see this move as long overdue, they stress the importance of ensuring political will and regulatory consistency to make it effective. Others, like Dr. Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), expressed cautious optimism, acknowledging the potential benefits for local refining and energy security if the policy is properly enforced.
At the same time, the ban’s success depends on ramping up Nigeria’s crude oil production to meet domestic needs. According to Senator Heineken Lokpobiri, Minister of State for Petroleum Resources, the nation has already made strides, with output reaching 1.8 million barrels per day, including condensates, a significant improvement from earlier levels. However, the road ahead will require continued investment, strong regulatory support, and improved security to fully realize the country’s domestic refining potential.
