Refiners Raise Alarm Over 483,000bpd Crude Allocation Shortage and Diversion
Local refiners operating under the umbrella of the Crude Oil Refinery Owners Association of Nigeria (CORAN) have issued a stark warning regarding the diversion of crude oil intended for domestic processing. They assert that weak delivery compliance is severely underutilizing plants and undermining Nigeria's critical energy security framework.
Policy vs. Reality: A Widening Gap
This pressing concern was formally presented by the Chairman of CORAN's Board of Trustees, Emmanuel Ihenacho, during a recent courtesy visit to the Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Oritsemeyiwa Eyesan. Ihenacho emphasized that while existing policy provisions explicitly support domestic crude supply, the actual deliveries to refineries remain frustratingly inconsistent.
This inconsistency is creating a significant and growing gap between official allocation figures and real-world utilization across Nigeria's expanding network of modular and mid-scale refineries. The chairman highlighted that this disconnect directly threatens the nation's economic stability and industrial capacity.
Data Reveals Massive Shortfall
According to detailed data presented by CORAN, approximately 483,000 barrels per day (bpd) allocated specifically for domestic refining are not fully reaching local processors. A substantial portion of this allocated crude is reportedly lost due to a combination of operational constraints, re-trading activities, and flexibility provisions within the system.
"We stand before you today as partners in execution, the downstream arm of Section 109 of the Petroleum Industry Act (PIA)," Ihenacho stated during the meeting. "When crude is allocated for domestic refining, we are the ones who translate that allocation into petrol in Ibadan, diesel in Kano, and aviation fuel at MMIA. When you secure crude at the wellhead and terminal, we ensure that value is retained within Nigeria’s economy."
The Core Issue: Allocation Does Not Equal Delivery
Ihenacho drew a critical distinction between policy intent and operational reality. "However, Madam Chief Executive, as you are fully aware, allocation does not always translate to delivery. And a license does not automatically translate to production. That gap between policy and product is why we are here today," he explained.
He respectfully outlined the harsh realities faced by downstream partners: "First, Domestic Crude Supply Obligation (DCSO) compliance remains suboptimal. Data indicate that of the 483,000 barrels per day allocated, only a fraction consistently reaches domestic refineries. The rest is lost to operational constraints, re-trading, or flexibility provisions. Each diverted barrel represents lost jobs, lost value, and lost opportunity for Nigeria."
Operational and Financial Consequences
The CORAN chairman further noted that despite ongoing reforms in the upstream petroleum sector and increasing recognition of domestic crude supply obligations, the persistent absence of a consistent and reliable feedstock supply continues to severely constrain refinery operations. He reported that several plants, including key modular facilities, remain technically functional but are critically unable to operate at their optimal designed capacity due to these erratic crude deliveries.
"Our members: Edo Refinery, Duport/Pulon, OPAC, among others, remain operational but underutilised due to inconsistent supply," Ihenacho detailed. "A refinery cannot be sustained on erratic feedstock. Without stability, financing weakens, workforce morale declines, and community expectations are unmet."
Additional Challenge: Pricing Frameworks
Beyond the primary issue of supply gaps, Ihenacho also flagged significant pricing challenges. He pointed out that current pricing frameworks, which are typically tied to international benchmarks, fail to accurately reflect the unique economic and operational realities of domestic refining operations within Nigeria. This misalignment adds another layer of financial pressure on an already strained sector, complicating long-term planning and investment.
