At the heart of Nigeria’s fuel production struggles lies a simple but devastating reality: local refineries, including the high-profile Dangote Petroleum Refinery, just aren’t getting the crude oil they need. And now we know why.
The Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, laid the issue bare on Wednesday at the Nigeria Energy International Summit in Abuja, revealing a tangled web of pre-existing commitments and underproduction that’s choking domestic supply.
“Most International Oil Companies (IOCs) operating in Nigeria had already signed long-term agreements with their customers before production even began,” Lokpobiri explained. “So when crude comes out of the ground, a lot of it is already spoken for.”
“Without crude, we can’t refine. It’s that simple,” one industry insider told journalists. “And if local refineries can’t operate at full capacity, we remain stuck importing what we should be producing ourselves.”
The consequences of this shortfall are felt nationwide. Nigeria’s three major operational refineries contribute less than 50% of the country’s daily petrol needs, a stark gap that pushes the country toward costly fuel imports and drives up prices.
For Lokpobiri, the solution lies in one critical area: ramping up production. “We can’t distribute what we don’t produce. If we boost our crude output, we can meet both domestic needs and international obligations,” he stressed.
But boosting production won’t happen overnight. The minister pointed to chronic underperformance in Nigeria’s upstream oil sector, the foundation of exploration and production, as the root of the crisis.
He remains optimistic that the government’s recent efforts to create a more business-friendly atmosphere are laying the groundwork for progress. “We’ve made steady strides in under 18 months. We’re shaping policies to make our fiscal terms globally competitive and attractive to investors,” he said.
