By: Tijani Salako.
Nigeria’s downstream petroleum market is undergoing its biggest transformation in decades as the Dangote Refinery reshapes fuel supply, cuts reliance on imports and positions the country as a net exporter of refined petroleum products. However, analysts say inconsistent domestic crude supply remains the major obstacle preventing the refinery from delivering its full economic benefits.
Recent data released by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) showed that petrol imports increased in July after supplies from domestic refineries fell by 21 per cent within one month. Domestic PMS supply declined from 32.5 million litres per day in June to 25.8 million litres per day in July, while imports rose from 18.1 million litres per day to 19.7 million litres per day, highlighting persistent supply gaps despite growing local refining capacity.
The July figures suggest that although local refining capacity has expanded significantly, Nigeria still depends on imported petrol to meet national demand whenever output from domestic refineries declines.
The Dangote Refinery has nevertheless changed Nigeria’s position in the global oil market. According to the U.S. Energy Information Administration (EIA), Nigeria’s exports of refined petroleum products have increased more than seven-fold since 2023, with cargoes now reaching markets across West Africa, Europe and other regions.
The refinery’s growing production has also contributed to lower import volumes over the past year and increased the availability of locally refined petrol, diesel and aviation fuel in the domestic market.
Despite these gains, crude oil supply remains the refinery’s biggest challenge. Industry estimates show the refinery still imports between 30 and 40 per cent of its crude feedstock because supplies from Nigerian producers remain insufficient to meet its processing needs.
Stakeholders attribute the shortage to crude pricing disagreements, long-term oil-backed contracts and supply commitments that limit the volume available for domestic refining.
The Crude Oil Refinery-owners Association of Nigeria (CORAN) has repeatedly called for reforms to Nigeria’s domestic crude supply framework, arguing that local refineries should receive adequate crude at transparent and competitive prices before exports are prioritised.
On its part, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) says compliance with the Domestic Crude Supply Obligation has improved significantly, rising to over 90 per cent as more producers meet their obligations to supply local refineries.
Industry analysts believe sustained compliance with domestic crude obligations will strengthen refining operations, reduce import dependence and improve energy security.
They also argue that adequate crude supply will enable the Dangote Refinery and other local refineries to operate closer to full capacity, increasing competition in the downstream market and supporting more stable fuel prices.
Analysts maintain that resolving crude supply and pricing challenges is now critical to unlocking the full benefits of Nigeria’s refining revolution through lower fuel costs, higher export earnings, stronger foreign exchange inflows and greater value addition within the country’s oil and gas sector.
