International Oil Companies (IOCs) operating in Nigeria have persisted in avoiding direct crude oil supplies to local refineries.

According to findings, IOCs continued to evade local refineries in violation of a law governing the supply of crude oil to domestic refineries, leaving nearly 60 million barrels of Nigerian crude oil stranded and unsold, floating in the high seas.

Several IOCs have persisted in giving preference to foreign oil traders over domestic refinery operators in spite of legally binding provisions under Nigeria's Petroleum Industry Act (PIA), according to documents obtained by Leadership.

Analysts have characterised this practice as exploitative and detrimental to the nation's energy security.

In order to provide sufficient feedstock for domestic refining, producers are required by the Domestic Crude Supply Obligations (DCSO), which are outlined in Sections 8(c) and 109 of the PIA, to sell crude oil to Nigerian refineries.

IOCs are alleged to have circumvented this requirement by selling to foreign traders, primarily in the Mediterranean region, Southern Africa, and the Far East, who subsequently resell the same crude to Nigeria at a price that is $5 to $6 per barrel higher than international standards.

IOCs sell at higher premium

Local refineries are now essentially priced out of their own market as a result of this strategy.

“IOCs offer crude to local refineries at a significantly higher premium compared to the prices they charge in other international markets. This is nothing but a coordinated effort to undermine the survival of Nigerian refineries, which pose a threat to international refineries owned by some of these IOCs,” said Bimbo Oyarinu, a public affairs analyst.

“Instead of supplying local refineries that are desperate for crude, these IOCs prefer to sell to traders who add a premium and eventually bring the same crude back to Nigeria — at a much higher cost.”

According to energy analyst Dan Kunle, who spoke with LEADERSHIP, the recent decline in global oil prices has caused numerous cargoes to float on the high seas since buyers and sellers of crude oil are now at odds over pricing.

“Unfortunately, when prices fall, such disagreements often lead to the floating of cargoes on the seas, as sellers will be looking for buyers who can buy at favourable prices. Most of the vessels carrying the oil are on charter, which means costs continue to accrue while the cargo remains unsold or undelivered. At a time like this, everybody loses,” Kunle said.

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC), which is mandated to enforce the PIA, has come under scrutiny for failing to ensure compliance. While the Commission has repeatedly issued warnings to oil producers, critics argued that enforcement has been largely symbolic.

In a letter dated February 2, 2025, NUPRC chief executive officer, Gbenga Komolafe, warned oil firms that crude designated for domestic refining must not be exported.

Local refineries forced to import crude

In an ironic twist, Nigerian refineries are now being forced to import crude oil to keep running. According to a report by The Punch Newspapers, the Dangote Petroleum Refinery and other modular plants could spend up to $8.56 billion to import approximately 122.4 million barrels of crude oil over the next six months.

That translates to an import bill of about $1.43 billion per month — a staggering cost for a country with some of the largest oil reserves in Africa.

Dangote’s refinery has already sourced crude from countries including the United States, Angola, and Algeria, as local supply remains inadequate.

As Nigeria continues to face foreign exchange shortages, rising inflation, and a sluggish economic recovery, many industry stakeholders believe the government must act decisively.

“This is a pivotal moment for the industry,” said Moses Ebirien, an oil and gas consultant based in Port Harcourt. “We cannot afford to let international companies operate with impunity, especially when they’re undermining the very laws that are supposed to ensure Nigerians benefit from our natural resources.”
While the NUPRC’s recent threats may signal a shift in tone, for many in the sector, words alone will not suffice.

“We are sitting on a wealth of resources, yet paying others to use them,” Oyarinu emphasised. “That’s an economic paradox we cannot afford.”

Marketers speak as NNPC announces petrol price

Legit.ng reported that Petroleum marketers have raised concerns following the Nigerian National Petroleum Company Limited’s (NNPCL) reduction in the price of Premium Motor Spirit (petrol).

On Easter Monday, April 21, 2025, the NNPC directed its filling stations in Lagos to reduce the pump price from N910 to N880 per litre, while in Abuja, the petrol price dropped from N950 per litre to N935.

The move by NNPC comes shortly after the Dangote refinery lowered its ex-depot price from N865 to N835 per litre, prompting adjustments in retail prices by its partners such as MRS, Heyden, Optima Energy, TechnOil and Ardova.