Nigeria’s oil production, currently hovering around 1.34 million barrels per day (bpd), has raised serious concerns among key players in the oil and gas sector, with industry stakeholders warning of mounting economic and energy security risks. At this production rate, the country faces the dilemma of either continuing to export crude for foreign exchange earnings or prioritising local refining to ensure energy stability both of which appear increasingly difficult to achieve under the current circumstances.
The issue took centre stage at the inaugural summit of the Crude Oil Refinery Owners Association of Nigeria (CORAN), held in Lagos on Tuesday. Themed “Making Nigeria a Net Exporter of Petroleum Products,” the summit brought together refinery operators and crude oil producers, who expressed doubts about the government’s ambition to transform Nigeria into a refining hub and a net exporter of refined petroleum products. They warned that without immediate and substantial measures to increase production, the goal may remain out of reach.
Momoh Jimah Oyarekhua, Chairman of OPAC Refineries and CORAN, was among the first to address the challenge, pointing out that Nigeria’s current oil production levels are insufficient to meet domestic refinery demand, let alone sustain exports. According to him, the nation’s refineries have a combined capacity of 1,122,000 bpd, while Nigeria’s daily crude output barely stands at 1.35 million bpd.
“Mathematically, with a daily demand of 750,000 barrels for local refineries, sustaining the full operation of these plants will be a struggle,” Oyarekhua said.
He highlighted that even when fully operational, Nigeria’s major refineries NNPC (445,000 bpd), Dangote (650,000 bpd), Aradel (11,000 bpd), OPAC (10,000 bpd), Waltersmith (5,000 bpd), and Edo Refinery (1,000 bpd) would still be constrained by the country’s limited crude supply. “Without sufficient crude production to both meet domestic refining needs and generate revenue through exports, Nigeria’s ambitions are at risk,” he added.
Oyarekhua pointed to several factors hampering progress, including the frequent breaches of oil assets, unreliable government policies, and a lack of investor incentives. He also called for more cohesive collaboration among upstream, midstream, and downstream stakeholders to support the government’s efforts and drive the country’s refining objectives.
Abdulrazaaq Isa, Chairman of the Independent Petroleum Products Group (IPPG) and Managing Director of Waltersmith Refinery, echoed these concerns. While he lauded the Federal Government’s recent policy to sell crude oil in naira, Isa stressed the need to “retweak” existing policies to resolve critical inadequacies in the sector.
He emphasised that aligning crude supply with the Petroleum Industry Act (PIA) under a “Willing Buyer and Willing Seller” framework is essential for bolstering domestic refining capacity. He also urged the government to tighten border controls to curtail the smuggling of refined products, which threatens the stability of in country supplies.
“The current production level of 1.35 million bpd is an existential threat to our efforts to boost local production, support domestic refining, and ensure sustainable exports for foreign exchange earnings,” Isa remarked.
Osagie Okubor, Chairman of the Oil Producers Trade Section (OPTS) and a senior executive at Shell Nigeria, also raised concerns about the lack of investor confidence, which he said has stifled upstream production. Okubor argued that Nigeria must aggressively attract investment to raise crude output, warning that if all produced crude were directed toward domestic refining, none would remain for export, severely impacting foreign exchange earnings.
He called for immediate action to scale up production in the upstream sector, including creating a more favourable environment for investors. “Nigeria must address investor apathy if we are to increase production and avoid jeopardising both local refining and exports,” Okubor said.
The summit underscored the critical need for Nigeria to strike a delicate balance between crude oil production, local refining, and export revenue generation. As global energy markets remain volatile, the country’s ability to address these challenges will be pivotal to securing both its economic stability and energy future.
The government’s recent efforts, including the naira-denominated crude sale policy and the implementation of the PIA, mark significant steps towards reform. However, without tangible improvements in crude production and sustained investor engagement, Nigeria’s potential as a refining hub and net exporter of petroleum products could remain elusive.
As stakeholders await further policy adjustments, the country’s oil and gas sector stands at a critical juncture where strategic decisions taken today could shape the future of its energy landscape for years to come.
