• Emphasizes transparent, competitive market operations to spur growth

The Independent Petroleum Producers Group (IPPG) has urged Nigerian petroleum industry stakeholders to shift the prevailing refining debate from installed capacity and regulatory mandates to the more fundamental task of building a commercially viable and reliable crude supply system, warning that the country’s growing refining capacity could face severe feedstock constraints unless upstream production rises significantly.

Chairman of the group, Adegbite Falade, who spoke at the third Nigeria Oil Refining Summit (NORS 2026) in Lagos, said Nigeria had the geological and technical capacity to supply its expanding refining industry, but remained constrained by commercial and logistical challenges.

He argued that reliable refinery feedstock would depend on increased crude production, protection of evacuation infrastructure, appropriate matching of crude grades with refinery configurations and the development of a transparent, competitive and investable domestic crude market.

Falade said the issue had become urgent because domestic refineries could require more than 1.5 million barrels of crude per day in the medium term as existing plants are rehabilitated, new capacity comes on stream and modular refineries expand operations. That potential demand, he noted, is approaching Nigeria’s entire current liquids production, which stood at 1.68 million barrels per day in August 2026, according to the Nigerian Upstream Regulatory Commission (NUPRC).

He warned that with production hovering around 1.6 million barrels per day while refinery demand approaches 1.5 million barrels per day, the industry would have very little room to accommodate export commitments, government revenue needs, crude-backed financing obligations, joint-venture partner offtake, production outages, OPEC commitments, crude-grade mismatches and disruptions to pipelines and terminals.

“This is why the upstream industry must be placed at the centre of the refining conversation,” he said.

Mr Falade said Nigeria’s problem was not a lack of hydrocarbon resources, noting that the central challenge was converting reserves into actual production, production into dependable supply and supply into competitive domestic refining.

He pointed at the nation’s crude oil and condensate reserves profile of about 37.01 billion barrels and natural gas reserves of 215.19 trillion cubic feet as of January 1, 2026.

The needed conversion, he said, requires capital, fiscal stability, security, infrastructure, regulatory certainty and bankable commercial terms. He stressed that upstream and downstream operations must no longer be treated as separate industries but as components of a single integrated petroleum value chain.

He welcomed the progress recorded under the Domestic Crude Supply Obligation (DCSO), noting that compliance had risen from about 41 per cent in the first quarter of 2026 to approximately 97.4 per cent in the second quarter.

He however cautioned that regulatory compliance must ultimately translate into commercial supply, particularly as indigenous producers increasingly become the principal source of refinery feedstock.

IPPG, which represents 34 indigenous exploration and production companies, now accounts for more than half of Nigeria’s total oil and gas production, he said.

In a strong message to the refining industry, he declared that Nigeria cannot solve a supply deficit simply by reallocating an inadequate pool of crude. “Nigeria cannot refine barrels that are not produced” he stated, calling for policies that stimulate exploration, accelerate field development, expand marginal-field production, improve access to capital and preserve Nigeria’s competitiveness as an upstream investment destination.

Mr Falade stringly canvassed protection and modernisation of the infrastructure required to move crude from producing fields to refineries while acknowledging progress in tackling crude theft and pipeline sabotage. He made it clear that security alone was insufficient, insisting on dedicated crude evacuation corridors, secure pipelines, adequate terminal capacity, sufficient storage, functional jetties and efficient marine logistics.

He also called for developement of a “true domestic crude market”, capable of aggregating volumes from different producers, blending grades, facilitating transparent swaps and substitutions, and ensuring efficient delivery to refineries.

Falade stressed that crude supply could not be treated as a simple volume transaction because refineries require specific grades, volumes and quality delivered to particular locations and within particular timeframes under commercially viable terms.

He challenged stakeholders to look beyond meeting domestic refinery demand and deliberately position Nigeria as a regional and global refining and petrochemical hub. According to him, changing global refining patterns, energy-security concerns and shifting trade flows have created an opportunity for Nigeria to leverage its resource base, large domestic market, entrepreneurial capacity and geographical position to become a major African energy hub.

Falade acknowledged the role of recent petroleum-sector reforms in changing the operating environment, particularly the removal of petrol subsidy, movement towards a market-based foreign-exchange regime, the naira-for-crude initiative and implementation of the Petroleum Industry Act.

He said the reforms were providing market signals capable of attracting investment and improving efficiency, while commending the federal government for taking difficult but necessary decisions.

He also hailed the emergence of large-scale domestic refining, particularly the Dangote refinery, describing Nigeria’s attainment of net refined-product exporter status as a major departure from decades of exporting crude while importing refined products.

He said the 650,000-barrel-per-day Dangote refinery had transformed the energy landscape and pointed to its recent IPO as evidence of the economic value emerging from Nigeria’s refining industry and its potential to attract deeper domestic and international capital participation.

But Falade cautioned that installed refining capacity alone would not deliver the desired transformation. Nigeria’s ambition to become simultaneously a major crude producer, competitive refining centre and net exporter of refined products, he said, would depend on producing wells, secure infrastructure, functioning markets, bankable agreements, transparent regulation and mutual accountability.

In calling for a fundamental change in how the crude-to-refinery system is managed, he urged stakeholders to move away from annual allocation exercises towards rolling supply planning, from regulatory mandates towards bankable contracts, from capacity announcements towards verified throughput, from opaque discounts towards transparent market pricing, and from fragmented logistics towards aggregation and optimisation.

he made it clear that the industry must stop managing scarcity and concentrate on growing production, noting that the upstream industry is ready to work with government, regulators, refiners, financiers and infrastructure operators to create a domestic crude market that is secure, transparent, competitive and investable.

Such a market, he argued, would enable Nigeria not merely to feed its refineries but to build an integrated petroleum economy in which every barrel is directed towards its highest national and commercial value.