CORAN Nigeria: Demands Domestic Refining Policy Framework

• The Crude Oil Refinery Owners Association of Nigeria (CORAN) has urged the Federal Government to strengthen domestic refining and reduce reliance on imported petroleum products.
• Local refiners face significant challenges, including foreign exchange pressures, high borrowing costs, and inadequate crude supply infrastructure.
• In Q1 2026, only 28.5 million barrels of crude were delivered to domestic refineries despite 61.9 million allocated, primarily due to pricing discrepancies identified by NUPRC.
• CORAN proposed a new Domestic Refinery Crude Pricing Framework to ensure commercially sustainable crude supply, considering local costs and international benchmarks.
• The association also expressed concern over rising petrol imports, which increased from 18.1 million to 19.7 million litres per day between June and July 2026, while domestic supply declined.

The association emphasized that the objective of its proposals was to achieve "correctly priced crude," rather than subsidized crude, to foster a robust domestic refining sector.

The Crude Oil Refinery Owners Association of Nigeria (CORAN) has issued a compelling plea to the Federal Government, urging immediate and strategic intervention to bolster the nation's domestic refining capabilities. In a detailed position paper titled "Position Paper on the Urgent Need for Strategic Government Intervention to Strengthen Nigeria’s Domestic Refining Industry," the association underscored the critical necessity of reducing Nigeria's reliance on imported petroleum products. CORAN drew parallels with the United States, referencing former President Donald Trump's actions to support the American refining sector as a model for Nigeria's own CORAN Nigeria domestic refining policy.

The association articulated a robust case for government support, citing a multitude of challenges faced by local refinery operators. These include significant foreign-exchange pressures, prohibitively high borrowing costs, restricted access to long-tenor financing, persistent crude supply challenges, inadequate infrastructure, and elevated logistics expenses. CORAN firmly asserted that strengthening the domestic refining industry is not merely an industrial policy but also a crucial Nigerian energy security policy and a fundamental economic imperative for the nation.

A primary concern highlighted by CORAN revolves around the persistent difficulties in ensuring a consistent and commercially viable supply of crude oil to domestic refineries, despite Nigeria's status as a leading crude producer in Africa. The association presented stark figures from the first quarter of 2026, revealing that while 61.9 million barrels were allocated for domestic refineries and producers offered 68.7 million barrels, only 28.5 million barrels were ultimately delivered. This significant disparity, according to CORAN, was largely attributed by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) to pricing gaps between crude producers and local refiners, which often prevented offered crude from translating into completed transactions, exacerbating NUPRC crude supply challenges.

While acknowledging an improvement in the second quarter of 2026, where NUPRC reported that 53.7 million barrels of crude oil and condensate were supplied to local refineries—representing an impressive 97.4 percent performance of the Domestic Crude Supply Obligation—CORAN stressed that mere allocation is insufficient. The association emphasized that refineries require crude delivered under commercially sustainable conditions, asserting that "A refinery does not consume an allocation on paper. It consumes crude delivered under commercially sustainable terms." This highlights the need for a comprehensive approach beyond just meeting volume targets.

To address the critical issue of crude supply viability, the Crude Oil Refinery Owners Association of Nigeria advocated for a commercially sensible pricing template specifically tailored for crude supplied to domestic refineries. While recognizing the utility of international benchmarks such as Brent, WTI, and Platts as market references, CORAN argued against their mechanical application, especially when local refiners are simultaneously burdened with separate evacuation and logistics costs. This forms a core part of their proposed Domestic Refinery Crude Pricing Framework Nigeria.

The association's proposed framework is designed to be comprehensive, incorporating several key factors. These include internationally recognized crude benchmark values, quality differentials, the actual point of delivery, avoided international freight and insurance costs, domestic evacuation and logistics costs, the proximity between producing fields and refineries, and reasonable commercial margins for producers. The association emphasized that the objective of its proposals was to achieve "correctly priced crude," rather than subsidized crude, to foster a robust domestic refining sector. This framework aims to create a more equitable and sustainable environment for local refining operations.

Beyond crude supply, CORAN also voiced significant concern regarding the resurgence of petroleum product imports into Nigeria. The association urged the government to ensure that such imports are strictly utilized as a mechanism to address temporary supply gaps, rather than becoming a continuous reliance. This aligns with a broader Nigeria fuel import reduction policy. Data from the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) cited by CORAN illustrated this trend, showing a decline in domestic Premium Motor Spirit (PMS) supply from approximately 32.5 million litres per day in June 2026 to 25.8 million litres per day in July of the same year.

Concurrently, petrol imports witnessed an increase during the same period, rising from about 18.1 million litres to 19.7 million litres per day. While acknowledging the necessity for adequate petroleum product stocks and clarifying that it does not advocate for policies that could inadvertently create artificial shortages, CORAN issued a strong warning against the long-term implications of a sustained import regime. The association's stance underscores the urgency of developing a self-sufficient domestic refining capacity to secure Nigeria's energy future.

This article signals potential shifts in Nigeria's energy policy regarding domestic crude supply and fuel imports. Lawyers and compliance officers in the oil and gas sector should monitor government responses to CORAN's proposals, particularly any new pricing frameworks or regulatory interventions that could impact crude supply contracts, refining operations, or fuel distribution in Nigeria.

Source: Original reporting via The PUNCH