NUPRC Allocates Crude to Refineries, But Modular Operators Reject it and Give Reasons
- The Crude Oil Refinery Owners Association of Nigeria confirmed members did not lift any crude under the domestic supply scheme in Q2 2026
- CORAN spokesman Eche Idoko pointed to international pricing benchmarks like Brent and WTI as a key reason crude became too costly for smaller refineries
- NUPRC data showed Dangote Refinery received 98 per cent of all crude volumes offered to domestic refiners during the same period
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Legit.ng journalist Victor Enengedi has over a decade's experience covering energy, MSMEs, technology, banking and the economy.
Nigeria's modular refinery operators did not collect any crude oil under the Domestic Crude Supply Obligation (DCSO) in the second quarter of 2026, with their umbrella body blaming commercial terms it described as unworkable for the sector.
Source: UGC
The Crude Oil Refinery Owners Association of Nigeria (CORAN) spokesman, Eche Idoko, told our correspondent that pricing benchmarks used under the scheme administered by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) made the cost of crude prohibitive for smaller refiners. He also said logistics charges were being counted twice under the current model.
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"The smaller refineries couldn't take crude because of the issues we have outlined. The commercial terms were not realistic. And though receiving attention, these issues have not been resolved," Idoko said.
Why Modular Refineries Walked Away
Idoko explained that the core problem lies in how crude is priced. When sellers quote using international indices such as Platts, Brent, or West Texas Intermediate, the price already includes assumptions about freight, insurance, and other delivery costs. However, modular refineries typically collect crude directly from producing assets and pay separately for the evacuation, transportation, handling, and security involved in moving oil from the wellhead to their facilities.
"When the producers give modular refineries prices at Brent or WTI rates, they pay for freight and insurance while still bearing the cost of picking the product at the wellhead," Idoko said.
He called for a domestic crude pricing structure that reflects where delivery actually takes place and strips out costs that producers do not incur in these transactions.
Dangote Refinery Dominated Q2 Allocations
The NUPRC's second-quarter implementation report, which triggered CORAN's response, showed that 53.7 million barrels of crude oil and condensate reached local refiners between April and June 2026.
Of the 68.1 million barrels offered to domestic refiners during the period, 98 per cent went to the Dangote Petroleum Refinery.
Source: UGC
The refinery accepted 52.6 million barrels, equal to 78 per cent of what was offered to it. The NUPRC did not indicate that any other refinery received crude supplies in the quarter.
Idoko said the pricing model needed to account for the actual point of delivery and the full logistics burden carried by modular refineries, adding that international benchmarks often embed cost assumptions that bear no relation to how crude is physically moved within Nigeria.
Source: Legit.ng
