Nigeria’s rapidly expanding domestic refining industry could face a major crude supply challenge as demand from local refineries approaches 1.5 million barrels per day, leaving the country with an increasingly narrow margin between domestic requirements and current production.
Chairman of the Independent Petroleum Producers Group, Adegbite Falade, raised the concern at the 2026 Nigeria Oil Refining Summit in Lagos, warning that Nigeria cannot sustainably expand refining capacity without simultaneously increasing upstream crude production.
Current production stands at approximately 1.68 million barrels per day, while refinery requirements could exceed 1.5 million bpd as existing facilities increase utilisation, rehabilitated plants return to operation and additional modular refineries enter the market. Pasted markdown
That leaves a potentially tight production margin for exports, government revenue requirements, joint-venture obligations, operational disruptions and other commitments.
Refining Ambition Meets Production Reality
Nigeria’s refining landscape has changed significantly with the emergence of new private refining capacity and efforts to revive existing facilities.
However, refining more petroleum products locally requires reliable access to Nigerian crude.
Falade cautioned that regulation alone cannot guarantee sufficient supplies.
Asked whether Nigeria could reliably meet the growing crude requirements of its refining industry, he said: “Geologically, yes. Technically, yes. Commercially and logistically, not yet there and certainly not by regulation alone.”
The warning highlights an emerging policy dilemma.
Nigeria wants to reduce its dependence on imported petroleum products and process more of its crude domestically. But crude exports have historically provided substantial foreign-exchange and government revenues.
If domestic refinery requirements rise towards current national production levels before upstream output expands, policymakers and producers could face increasingly difficult allocation decisions.
FG Wants More Crude Refined Locally
The Federal Government has separately reaffirmed its determination to move Nigeria away from primarily exporting crude oil towards an economy that captures more value through domestic refining, petrochemicals and associated industries.
Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, represented by his Technical Adviser on Regulation, Umar Gwandu, said the government was strengthening the Domestic Supply Obligation to improve crude availability for local refineries. Pasted markdown
Lokpobiri said the mechanism should not simply be regarded as an administrative allocation system but as an instrument for strengthening energy security and connecting Nigeria’s upstream and downstream petroleum industries.
For Nigeria, the emerging challenge is therefore no longer simply building refineries.
The country must simultaneously increase crude production sufficiently to feed those facilities while maintaining other petroleum-sector obligations.
