Data indicates that International Oil Companies (IOCs) in Nigeria are bypassing local refineries, resulting in an estimated 60 million barrels of stranded crude oil. This ongoing issue is hindering Nigeria’s efforts to boost domestic refining capacity and maximize oil revenues.
Despite legislation requiring crude supply to local refineries, the IOCs continue to violate this, leaving substantial volumes of crude unsold. Meanwhile, PETROAN President Billy Gillis-Harry highlighted that the 83 refinery licenses granted by the NMDPRA reflect Nigeria’s growing attractiveness to oil and gas investors.Gillis-Harry stated that the new refinery licenses will increase Nigeria’s refining capacity to 1,124,500 barrels. He emphasized the need to allocate sufficient crude oil for local refineries to remain operational.
PETROAN also commended the reduction in petrol imports, which dropped from 44.6 million litres per day in August 2024 to 14.7 million litres by April 2025. Looking ahead, PETROAN plans to continue collaborating with the NMDPRA and industry stakeholders to tackle challenges and seize emerging opportunities.Gillis-Harry expressed confidence in significant growth and transformation for Nigeria’s petroleum industry. The 83 refinery licenses granted include 8 LTOs, 30 LTCs, and 45 LTEs. He highlighted the benefits of ensuring crude supply to local refineries, including increased domestic production, reduced reliance on imports, job creation, and economic growth.
Meanwhile, Indonesia is reportedly working to reduce its oil and LPG imports from Nigeria.Indonesia aims to increase energy trade with the U.S. by up to $10 billion, Energy Minister Bahlil Lahadalia revealed. In 2024, Indonesia imported 217,000 bpd of LPG, with the U.S. supplying 124,000 bpd, and 306,000 bpd of crude oil, mainly from Nigeria, Saudi Arabia, and Angola, with the U.S. providing only 13,000 bpd. To meet a broader goal of purchasing $18–$19 billion in U.S. goods and avoid a 32% tariff on exports, Indonesia plans to boost LPG and crude imports from the U.S., reducing imports from other sources by 20% to 30%.
Indonesia’s state energy firm, Pertamina, is reviewing its import strategy in response to the government’s proposal to increase LPG and crude imports from the U.S., which may reduce Nigeria’s share in Indonesia’s energy market. Meanwhile, despite Nigeria’s Petroleum Industry Act (PIA) mandating Domestic Crude Supply Obligations (DCSO), several IOCs are accused of bypassing local refineries in favor of foreign traders, which undermines Nigeria’s energy security. IOCs are reportedly selling crude to traders in the Far East, Mediterranean, and Southern Africa, who then resell it to Nigeria at a premium.
Local refineries are priced out as IOCs offer crude at a higher premium to them compared to international markets, undermining Nigerian refineries, according to analyst Bimbo Oyarinu. Instead of supplying local refineries, IOCs sell to traders who resell the crude back to Nigeria at a higher cost. Energy expert Dan Kunle noted that many cargoes remain stranded due to price disagreements between sellers and buyers following a drop in global oil prices.Falling oil prices often lead to stranded cargoes, as sellers seek better deals, causing costs to accrue. Energy expert Dan Kunle questioned why stranded crude isn’t used domestically, given Nigeria’s refining capacity.
He suggested a more dynamic and transparent approach. Meanwhile, the NUPRC faces criticism for weak enforcement of the PIA, despite issuing warnings to oil producers.In a February 2025 letter, NUPRC CEO Gbenga Komolafe warned oil firms against exporting crude meant for domestic refineries, threatening to block export permits. However, sources claim the practice continues, with the NUPRC criticized for failing to enforce sanctions. Industry analysts argue that IOCs exploit the system with little consequence, while local refineries are ignored.
Nigeria’s refining sector, despite new investments like Dangote’s refinery, struggles with local crude shortages, hindering progress. CORAN has criticized the regulatory system for prioritizing fuel imports over domestic refining. Eche Idoko of CORAN noted that crude supply shortages have stalled seven refineries, with refineries needing guaranteed feedstock to proceed.Refineries like Edo Refinery are now seeking crude from US suppliers due to local shortages, while others, like Walter Smith and Aradel Energy, refine intermittently. Many modular refineries have not refined in months.
Nigerian refineries, including Dangote’s, may spend $8.56 billion importing 122.4 million barrels of crude in six months, highlighting the high cost despite Nigeria’s large oil reserves.Amid foreign exchange shortages, rising inflation, and a slow economic recovery, many industry stakeholders urge the government to take decisive action.
