The Crude Oil Refinery Owners Association of Nigeria (CORAN) has confirmed that its members did not lift any crude oil under the Domestic Crude Supply Obligation (DCSO) in the second quarter of 2026, attributing the development to commercial terms it described as unworkable for smaller refiners.
Pricing Benchmarks and Double Charges Blamed
CORAN spokesman Eche Idoko told Legit.ng that the pricing benchmarks used under the scheme, which is administered by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), made the cost of crude prohibitive for modular refineries. He also said logistics charges were being counted twice under the current model.
“The smaller refineries couldn't take crude because of the issues we have outlined. The commercial terms were not realistic. And though receiving attention, these issues have not been resolved,” Idoko said.
Idoko explained that when sellers quote prices using international indices such as Platts, Brent, or West Texas Intermediate, the price already includes assumptions about freight, insurance, and other delivery costs. However, modular refineries typically collect crude directly from producing assets and pay separately for evacuation, transportation, handling, and security involved in moving oil from the wellhead to their facilities.
“When the producers give modular refineries prices at Brent or WTI rates, they pay for freight and insurance while still bearing the cost of picking the product at the wellhead,” Idoko added.
Dangote Refinery Dominated Q2 Allocations
The NUPRC’s second-quarter implementation report, which triggered CORAN’s response, showed that 53.7 million barrels of crude oil and condensate reached local refiners between April and June 2026. Of the 68.1 million barrels offered to domestic refiners during the period, 98 per cent went to the Dangote Petroleum Refinery.
The refinery accepted 52.6 million barrels, equal to 78 per cent of what was offered to it. The NUPRC did not indicate that any other refinery received crude supplies in the quarter.
Call for Domestic Pricing Structure
Idoko called for a domestic crude pricing structure that reflects where delivery actually takes place and strips out costs that producers do not incur in these transactions. He said international benchmarks often embed cost assumptions that bear no relation to how crude is physically moved within Nigeria.
The pricing model needed to account for the actual point of delivery and the full logistics burden carried by modular refineries, he said.
