If you thought Nigeria’s oil story was all about exports and dollar inflows, the reality on the ground paints a different picture. Local refineries, built to end decades of dependence on imported fuel, are struggling to get the very crude they were promised.

Between January and August 2025, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) confirmed that 67.6 million barrels of crude were supplied to domestic refiners. On paper, that looks impressive. In practice, it was less than half of what local processors actually requested, 123.5 million barrels.

This shortfall is not just a paperwork issue. It means plants like Dangote Refinery, as well as modular refineries, either have to source crude elsewhere (read: import), or are running below capacity, despite billions of naira in investments. It translates to sub-optimising the refinery capacity in-country, which also means higher prices of refined products at the pumps.

The Petroleum Industry Act 2021 was supposed to change this. Through the Domestic Crude Supply Obligation (DCSO), producers must set aside a portion of crude for local processors before exporting. The logic is simple: keep refineries fed, cut fuel imports, and save Nigeria billions in foreign exchange.

But in reality, the rules have holes. Producers still prefer selling abroad, where buyers pay in dollars, while local refiners, trading in naira and battling exchange rate volatility, cannot compete. The “willing buyer, willing seller” pricing model, meant to promote competition, has instead priced many local refiners out of the very market they were promised access to.

Also Read: Nigeria targets $60bn to boost gas production and energy projects

Nigeria produced about 1.63 million barrels per day in August. Yet, in the first quarter alone, 82 percent of production was exported. That left local refiners scrambling to secure feedstock in a system where enforcement of DCSO remains weak.

Industry experts warn that the stakes are high. Partial allocations do not just disrupt operations; they risk undermining Nigeria’s refining revolution. If crude supply to local plants remains inconsistent, the country may continue to rely on expensive imported petrol, passing the costs onto consumers who are already squeezed by inflation.

Bridging the gap, analysts say, will require more than directives. Stronger enforcement, transparent pricing models, and government-backed incentives are needed to balance producer profits with refiner survival. Otherwise, the billions sunk into modular and mega refineries could go to waste.

Nigeria has the policies, the production, and the potential. But unless local refiners get the crude they need, the promise of fuel self-sufficiency may remain out of reach, while tankers keep sailing abroad with the oil meant to power the nation at home.

Anita Chinedu