Nigeria's Crude Oil Export Surge Coincides with Domestic Refinery Shortages
Recent data from the Central Bank of Nigeria has revealed a significant disparity in the nation's crude oil distribution, highlighting critical challenges facing the domestic refining sector. Between January and October 2025, Nigeria exported approximately 306 million barrels of crude oil, representing nearly 69% of total production during that period. This export-focused strategy has left local refineries grappling with persistent feedstock shortages, forcing many facilities to operate at reduced capacity or shut down entirely.
Production and Export Figures Paint Concerning Picture
The Central Bank's detailed figures indicate that Nigeria produced about 443.5 million barrels of crude oil during the ten-month period, averaging roughly 1.45 million barrels per day. Monthly production showed notable fluctuations, peaking at 1.54 million barrels per day in January before declining in March and stabilizing around 1.40 million barrels per day between September and October. Export volumes closely mirrored these production trends, with approximately 306.7 million barrels shipped abroad and only about 137 million barrels allocated for domestic use.
Domestic Refineries Face Operational Challenges
Several major refining facilities, including the prominent Dangote Petroleum Refinery, have repeatedly raised concerns about inadequate crude supply despite existing policy frameworks designed to prioritize domestic needs. The Crude Oil Refiners Association of Nigeria (CORAN) has reported that many modular refineries have been forced to shut down intermittently due to difficulties accessing feedstock. According to CORAN's National Publicity Secretary, Eche Idoko, some refineries are operating at as little as 10% of their installed capacity, while others have remained closed for months due to crude unavailability.
Even the Dangote facility has faced constraints, compelling operators to source crude oil from international markets including the United States and neighboring African countries like Ghana. Dangote Refinery President Aliko Dangote confirmed that despite policy support measures, the refinery imported approximately 100 million barrels from the United States alone within a year.
Policy Framework and Implementation Gaps
The Domestic Crude Supply Obligation (DCSO), established under Section 109 of the Petroleum Industry Act, requires oil producers to prioritize crude supply to local refineries. This policy, enforced by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), aims to strengthen energy security, reduce refined product imports, and boost local refining capacity. However, industry players argue that the "willing buyer, willing seller" policy has undermined the DCSO's effectiveness by allowing crude to be sold at market-determined prices, making exports more attractive to producers who receive dollar-denominated payments.
The NUPRC has warned that oil producers failing to meet domestic supply obligations would not receive export permits. Nevertheless, the commission has acknowledged that several crude cargoes offered to local refiners were rejected due to pricing and crude grade concerns, further complicating the supply situation.
Economic Implications and Revenue Generation
Despite the domestic supply challenges, Nigeria generated substantial revenue from crude oil sales in 2025. Official estimates indicate the country earned approximately N55.5 trillion from crude oil sales during the year, representing an increase from the N50.88 trillion recorded in 2024. This revenue growth reflects both higher crude output and relatively supportive oil prices throughout the year, with Nigeria producing a total of 530.41 million barrels of crude oil between January and December 2025.
The ongoing imbalance between exports and domestic supply raises important questions about Nigeria's energy security strategy and the long-term viability of its refining sector. As local refineries continue to struggle with feedstock shortages while significant volumes of crude are exported, stakeholders are calling for more effective implementation of existing policies to ensure domestic refining capacity can be fully utilized.
