The Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) has alleged that oil producers are diverting the 500,000 barrels of crude oil allocated daily for domestic refining, prioritizing exports for quick dollar earnings.
The association commended the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) for banning the export of crude meant for local refineries, emphasizing that this policy would enhance local refining, reduce dependence on imported petroleum products, and ease pressure on Nigeria’s foreign exchange reserves.
In a statement by its Publicity Secretary, Joseph Obele, PETROAN claimed that the failure of oil producers to comply with domestic crude supply obligations has resulted in abandoned refineries, significantly undermining the country’s refining capacity.
“The exportation of crude oil meant for domestic refining has led to the abandonment of local refineries. It has been a major racketeering scheme, with producers and traders prioritizing quick foreign exchange proceeds over local refining,” PETROAN stated.
The association believes that enforcing the ban will positively impact the economy by enriching the petrochemical industry, supporting agriculture, reducing income inequality, and positioning Nigeria as a supplier of value-added petroleum products rather than just crude oil.
PETROAN’s National President, Billy Gillis-Harry, urged the NUPRC to take swift action against refineries, cargo vessels, and companies failing to comply with the policy. He expressed optimism that the directive would ensure sufficient refined petroleum supply in Nigeria, leading to price reductions and economic relief for consumers.
However, during a recent stakeholders’ meeting attended by over 50 industry players, refiners and producers blamed each other for inconsistencies in implementing the domestic crude supply obligation.
While oil producers argued that refiners often fail to meet commercial and operational terms, forcing them to seek alternative markets, refiners countered that producers were deliberately ignoring local supply agreements in favor of international sales.
The dispute previously affected the Dangote refinery, which struggled to secure crude oil for months. Dangote Group President Alhaji Aliko Dangote accused international oil companies of prioritizing Asian markets over local refineries, thereby sabotaging domestic refining efforts.
Following the controversy, the NUPRC intervened, mandating upstream operators to supply crude to Dangote and other local refiners. However, oil producers under the Independent Petroleum Producers Group (IPPG) resisted the directive, arguing against being compelled to sell to specific refiners.
The IPPG called on the Nigerian National Petroleum Company Limited (NNPC) to leverage its allocated crude volumes to meet local refining needs, while also rejecting Dangote Refinery’s direct supply nominations, citing a conflict with the Petroleum Industry Act’s willing-buyer, willing-seller model.
In an attempt to resolve the crisis, President Bola Tinubu ordered that crude designated for local refineries be sold to Dangote and other Nigerian refiners. However, the naira-for-crude initiative launched in October has yet to fully address the crude supply shortages.
Amid ongoing challenges, reports indicate that the 650,000-barrel-per-day Dangote refinery is set to receive 12 million barrels of crude oil from the United States this month.
Join Our Telegram Channel For Instant Notification
