PETROAN accuses oil producers of diverting daily allocations of 500,000 barrels of crude oil meant for local refineries, impacting Nigeria’s refining capacity
The Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) has raised concerns over the alleged diversion of 500,000 barrels of crude oil daily, intended for local refineries.
Also read: Dangote refinery’s impact on European petrol market
This allegation comes as the association commended the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) for its ban on the export of crude oil allocated for domestic refining.
PETROAN expressed hope that this policy would enhance local refining capacity, reduce the nation’s reliance on imported refined petroleum products, and alleviate pressure on foreign exchange supply.
According to the association, numerous local refineries have been abandoned due to non-compliance with the domestic crude supply obligation, with oil producers allegedly prioritising quick foreign exchange earnings over the development of local refining infrastructure.
The association’s Publicity Secretary, Joseph Obele, noted that the exportation of crude oil meant for domestic refining has been part of a broader racketeering scheme, with producers and traders putting profits from foreign sales ahead of Nigeria’s long-term refining goals.
He stated, “Approximately, 500,000 barrels of crude oil per day are allocated for domestic refining, but these volumes often find their way to the international market.”
PETROAN’s National President, Billy Gillis-Harry, lauded the NUPRC’s actions and called for swift enforcement of the new policy, stressing that local refining would have a positive impact on Nigeria’s petrochemical and agricultural sectors.
He believes this move will not only reduce income inequalities but also position Nigeria as a supplier of value-added products rather than just raw materials.
However, discussions during a recent stakeholders meeting revealed a divide between oil producers and refiners.
Producers argued that refiners fail to meet commercial and operational terms, prompting them to seek international markets for their crude.
Conversely, refiners accused producers of neglecting local supply obligations, preferring to export crude instead of supplying local refineries.
The ongoing crude supply issues have also affected the Dangote Refinery, which has faced months of challenges sourcing adequate crude.
Alhaji Aliko Dangote, President of the Dangote Group, previously accused international oil companies of prioritising markets in Asia and sabotaging his refinery’s operations by refusing to supply crude.
In response to the crisis, President Bola Tinubu ordered that crude oil meant for local refineries be sold to Dangote and others.
Despite the implementation of the naira-for-crude deal in October 2024, concerns persist that the policy has not fully resolved the crude supply challenges for local refineries.
The Dangote refinery, with a 650,000-barrel capacity, is also expected to receive 12 million barrels of crude oil from the United States this month, signalling a continued struggle to meet domestic crude supply needs.
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