Nigeria Faces Crude Supply Crunch as Refinery Demand Nears 1.5m Barrels Daily

Nigeria’s Refineries May Need 1.5m bpd as Crude Supply Comes Under Pressure

Nigeria’s expanding refining industry could face a growing crude supply challenge as domestic refineries are projected to require more than 1.5 million barrels per day (bpd), placing pressure on the country’s current production levels.

The warning comes as refinery capacity expands and existing facilities increase utilisation, while new modular plants are expected to add further demand for domestic crude.

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At current production of about 1.68 million bpd including condensates, the projected refinery requirement would leave a relatively narrow margin for exports, government revenue, production obligations and other crude commitments.

Refinery Demand Could Exceed 1.5m Barrels Daily

Adegbite Falade, Chairman of the Independent Petroleum Producers Group (IPPG), raised the concern at the 2026 Nigeria Oil Refining Summit in Lagos.

Falade said refinery demand could exceed 1.5 million bpd as existing plants increase utilisation, rehabilitation progresses and additional modular refineries become operational.

The challenge is therefore shifting from simply increasing refining capacity to ensuring that sufficient crude is available to keep those facilities operating consistently.

Nigeria’s Crude Production Remains the Key Constraint

Nigeria produced about 1.68 million bpd of crude and condensates in August 2026, while crude oil excluding condensates stood at about 1.5 million bpd. The country also recorded its fourth consecutive month of compliance with its OPEC crude production quota.

However, higher refinery demand could absorb an increasingly large share of domestic production.

Falade argued that Nigeria needs to increase production while improving crude evacuation infrastructure and matching available crude grades with refinery configurations.

He noted that the country has substantial hydrocarbon reserves, with the NUPRC’s January 2026 reserves position putting crude oil and condensate reserves at 37.01 billion barrels and gas reserves at 215.19 trillion cubic feet.

The challenge, therefore, is converting those reserves into commercially viable production and reliable domestic supply.

Domestic Crude Supply Obligation Comes Under Focus

The development also places greater attention on the Domestic Crude Supply Obligation (DCSO).

According to NUPRC data cited at the summit, compliance with the DCSO rose to 97.4% in the second quarter of 2026 from approximately 41% in the first quarter.

Falade argued that the next stage should involve moving from annual crude allocations towards rolling supply plans and bankable long-term contracts.

For refiners, the availability of crude is only one part of the problem. The feedstock must also be commercially accessible, suitable for the refinery and deliverable through reliable logistics infrastructure.

Refiners Demand More Commercially Viable Crude Access

Momoh Oyarekhua, Chairman of the Crude Oil Refinery-Owners Association of Nigeria (CORAN), said some domestic refineries continue to struggle to secure crude despite the growth in refining capacity.

He called for the full institutionalisation of the Naira-for-Crude arrangement and a transparent domestic crude-pricing framework that accounts for crude quality, delivery location and domestic transportation costs.

CORAN also called for crude swaps and proximity-based supply arrangements, which could allow producing fields to supply nearby refineries without unnecessary transportation through distant export infrastructure.

Infrastructure Becomes Critical to Refining Growth

The crude supply challenge is also an infrastructure challenge.

Nigeria will require more effective pipelines, storage terminals, depots, jetties and other evacuation infrastructure if rising production is to translate into dependable refinery feedstock.

CORAN has called for shared pipelines, depots, storage terminals, jetties and rail evacuation infrastructure as part of a broader framework for supporting refinery expansion.

For Nigeria’s industrial property market, these investments could have wider implications.

Refineries and crude-processing facilities generate demand for warehouses, storage facilities, logistics bases, industrial estates and worker accommodation around their operating corridors. Improved transportation and energy infrastructure can also make surrounding locations more attractive for industrial and commercial development.

Refinery Expansion Could Reshape Industrial Development

The expansion of domestic refining is creating new potential economic corridors around major energy infrastructure.

The Dangote refinery, for example, has already become a major industrial anchor in the Lekki area, while modular refineries and other processing facilities are emerging across different parts of the country.

The Dangote refinery reached production levels of up to 700,000 bpd in June 2026, while the company plans a further expansion towards 1.4 million bpd by 2029.

As refinery capacity grows, demand for supporting infrastructure could increase across transportation, warehousing, equipment supply, housing and other services.

Production Growth Must Keep Pace With Refining Capacity

The emerging supply pressure highlights a potential mismatch between Nigeria’s ambitions for domestic refining and its current crude-production capacity.

Increasing refinery capacity without simultaneously securing sufficient feedstock could leave some facilities operating below capacity or relying more heavily on imported crude.

That would weaken some of the economic benefits expected from domestic refining, particularly if Nigeria continues exporting crude while importing feedstock for local processing.

The industry therefore faces a dual requirement: increase crude production while building the infrastructure and commercial mechanisms needed to move the right crude to the right refinery at competitive terms.

Outlook

Nigeria’s refining expansion is creating a new demand profile for crude, with domestic refineries potentially requiring more than 1.5 million bpd as utilisation rises and new plants come online.

Meeting that demand will depend on higher production, stronger crude evacuation infrastructure, commercially viable supply contracts and effective implementation of domestic crude-supply policies.

For the wider property and infrastructure market, the implications extend beyond petroleum. Sustained refinery growth could stimulate new logistics, industrial and residential development corridors, provided the supporting infrastructure keeps pace with the expansion of Nigeria’s energy-processing capacity.

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