Many modular refineries in Nigeria are still waiting for their first crude oil supply, six months after the Nigerian National Petroleum Company Limited promised to support them. These refineries were expected to boost local fuel production and reduce reliance on imported petroleum products, but they are struggling to operate due to a lack of crude oil.
Crude Supply Delays Affecting Operations
Modular refineries are designed to refine crude oil on a smaller scale, making them a key part of Nigeria’s plan to improve local fuel production. However, many of them are producing at only 20 percent capacity or have completely shut down due to a lack of crude supply. Some operators have resorted to buying crude from third-party suppliers at much higher prices, which is making their operations unsustainable.
Eche Idoko, the National Publicity Secretary of the Crude Oil Refinery Owners Association of Nigeria, said modular refineries have not received any crude from NNPC since the naira-for-crude scheme started in October 2024.
Only a Few Refineries Are Operating
Nigeria has 30 licensed modular refineries, but only five are currently operational. The remaining refineries are either under construction or waiting for crude supply. The refineries that are still functioning include Waltersmith Refinery, which has a capacity of 5,000 barrels per day; Aradel Refinery, with 11,000 barrels per day; OPAC Refinery, producing 10,000 barrels per day; Duport Refinery, operating at 2,500 barrels per day; and Edo Refinery, which has a capacity of 6,000 barrels per day.
Idoko noted that Edo Refinery has been forced to buy crude from third parties and transport it by truck, leading to operational costs that are four times higher than expected. Waltersmith and Aradel refineries continue to function because they source crude from their marginal oil fields, but even this supply is not enough to fully utilise their refining capacity.
NNPC’s Focus on Dangote Refinery
Industry experts believe that NNPC has prioritised supplying crude to Dangote Refinery over smaller modular refineries. On 11 March 2025, NNPC confirmed that it was in talks with Dangote Refinery to extend its naira-for-crude supply contract. The original six-month agreement, which started in October 2024, is set to expire this month.
Under this agreement, NNPC supplied 48 million barrels of crude to Dangote Refinery. However, the seven other refineries that were supposed to benefit from the agreement did not receive any crude supply, leaving modular refinery operators frustrated. Even Dangote Refinery did not receive the full volume it was expecting, which points to broader supply challenges.
NNPC has stated that discussions are ongoing regarding a new crude supply contract, but details about the volume, pricing, and duration have not been disclosed.
Government Reviewing Naira-for-Crude Policy
In response to growing concerns, the government recently held a meeting to review the naira-for-crude policy. Key officials in attendance included the Minister of Finance, Wale Edun; the Executive Chairman of the Federal Inland Revenue Service, Zacch Adedeji; and representatives from NNPC, the Central Bank of Nigeria, the Nigerian Upstream Petroleum Regulatory Commission, the Nigerian Midstream and Downstream Petroleum Regulatory Authority, and Dangote Refinery.
During the meeting, NNPC presented a crude supply report, while NMDPRA provided updates on domestic fuel production covering Dangote Refinery, Warri Refinery, and Port Harcourt Refinery. The discussion focused on how to sustain the policy and ensure that local refineries receive sufficient crude to operate effectively.
The Future of Modular Refineries
The delay in crude supply is making it increasingly difficult for modular refineries to remain in business. While the government continues to focus on large-scale refining projects, smaller refiners believe they must be included in crude supply agreements to help Nigeria reduce its reliance on imported fuel and stabilise petrol prices.
Refinery operators are calling on the government and NNPC to honour their commitment and ensure fair crude distribution to all refineries, not just Dangote. Without this, Nigeria’s goal of achieving self-sufficiency in fuel production may not be realised.
