CORAN Seeks Policy Shift, Demands Commercially Viable Crude Supply For Local Refineries

Nigeria’s expanding domestic refining capacity could face increasing pressure from inadequate and commercially challenging crude oil supply unless stronger links are established between upstream production and local refineries, the Crude Oil Refinery-Owners Association of Nigeria (CORAN) has warned.

The association said Nigeria’s next phase of petroleum-sector reform should focus on ensuring that existing refineries obtain adequate crude at commercially viable terms, while improving pipelines, storage and evacuation infrastructure needed to move crude and refined products efficiently.

The chairman of CORAN, Momoh Jimah Oyarekhua, made the call while presenting the association’s 10-point policy agenda at the Nigeria Oil Refining Summit in Lagos.

Oyarekhua said the country must move beyond the traditional model of exporting crude oil while importing refined petroleum products by increasing the volume of crude processed locally and gradually developing surplus refining capacity for export.

“Despite our abundant crude resources, some domestic refineries continue to face difficulties accessing crude oil on commercially viable terms,” he said.

The development comes as the expansion of domestic refining capacity is increasing demand for crude feedstock, placing greater emphasis on Nigeria’s ability to raise oil production and establish predictable supply arrangements between producers and refiners. Stakeholders at the summit also warned that current production levels could come under pressure as refinery demand increases.

CORAN is therefore seeking the full institutionalisation of the Naira-for-Crude arrangement, with transparent eligibility for domestic refineries, including modular facilities.

It also wants a domestic crude pricing framework that takes account of crude quality, delivery locations and the cost of transporting crude within Nigeria, arguing that domestic refiners should be able to obtain feedstock under commercially sustainable conditions.

The association further called for stronger enforcement of the Domestic Crude Supply Obligation contained in Section 109 of the Petroleum Industry Act, while allowing producers and refiners to negotiate workable commercial arrangements.

Another proposal is the increased use of crude swaps and proximity-based supply arrangements, under which crude from producing areas could be supplied to nearby refineries without unnecessary transportation through distant export infrastructure.

The association also called for a gradual reduction in petroleum-product imports as domestic refining capacity becomes sufficient to meet national demand. It proposed that imports should increasingly be limited to genuine supply gaps and strategic stock requirements.

Oyarekhua said the objective should be to move Nigeria from a crude-exporting economy that imports refined products to one capable of processing a larger proportion of its crude domestically and generating additional export earnings from refined products.

“Refining for value means more than producing fuel. It means retaining foreign exchange, creating jobs, developing local expertise, supporting petrochemicals and manufacturing, and capturing greater economic value within Nigeria,” he said.

CORAN identified financing and infrastructure as other constraints to the expansion and efficient operation of domestic refineries, just as the association proposed a refinery development financing framework offering longer-tenor funding, guarantees and refinancing mechanisms for refinery upgrades, expansion, optimisation and new projects.

It also called for increased investment in shared infrastructure, including pipelines, storage terminals, depots, jetties and rail evacuation systems, saying inadequate logistics could increase operating costs and weaken the competitiveness of locally refined products.

Meanwhile, it further proposed strategic petroleum-product reserves to cushion the market against temporary refinery shutdowns, maintenance activities and other supply disruptions.

The association wants regulatory and fiscal measures that encourage refinery optimisation, particularly investment in conversion units capable of increasing the production of Premium Motor Spirit, aviation fuel, liquefied petroleum gas and other higher-value petroleum products.

Similarly, it also proposed a national refining and export roadmap with measurable targets for refinery utilisation, capacity expansion, domestic supply, reduction of imports and growth in refined-product exports.

The proposals come amid broader calls from oil producers and refiners for Nigeria to increase crude production as domestic refining demand rises. The Independent Petroleum Producers Group has separately argued that Nigeria needs higher production, stronger evacuation infrastructure and a more transparent domestic crude market to sustain the refining expansion.

Consequently, for Nigeria, the emerging challenge is increasingly shifting from simply having refining capacity to ensuring that the facilities can obtain sufficient feedstock, operate consistently and move their products to consumers and export markets at competitive costs.

Oyarekhua said the country’s refining policy should therefore focus on connecting crude production with domestic processing capacity while creating an environment in which refineries can operate at higher utilisation levels.

He, however, added that greater domestic refining would allow Nigeria to retain more value from its crude resources, reduce exposure to imported petroleum products and create opportunities for industrial activities linked to refining and petrochemicals.

Meanwhile, the group’s position is that Nigeria’s refining strategy should ultimately be measured not only by the number or installed capacity of refineries but by actual capacity utilisation, domestic product availability and the country’s ability to produce surplus refined products for export.