Pricing Disputes Limited Crude Supplies To Domestic Refineries In Q1 – NUPRC

Pricing disputes between international oil traders and domestic refineries restricted crude oil supplies to local refiners to just 28.5 million barrels in the first quarter of 2026, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has revealed.

This was despite the 61.9 million barrels of crude that were allocated  by NUPRC to domestic refineries during the quarter under the Domestic Crude Supply Obligation, in line with the Petroleum Industry Act. while producers offered to supply 68.7 million barrels.

Actual supply, however, stood at 28.5 million barrels, equivalent to about 46 per cent of allocated volumes and around 41 per cent of volumes offered.

The regulator attributed the gap between offered volumes and actual deliveries mainly to pricing differences between crude producers and domestic refiners. It said transactions continue to operate on a “willing buyer, willing seller” basis.

“The Nigerian Upstream Petroleum Regulatory Commission has released the statistics on the enforcement of the Domestic Crude Supply Obligation (DCSO) in accordance with the provisions of the Petroleum Industry Act.

“A summary of the monthly allocation shows that 61.9 million barrels of crude oil were allocated to domestic refineries during the quarter, while producers collectively offered a higher volume of 68.7 million barrels. However, actual supply to local refineries was 28.5 million barrels, translating to a supply conversion rate of 36-46 per cent as of the end of the first quarter (Q1) 2026.”

The commission noted that although producers have shown willingness to meet and even exceed supply targets, market realities continue to shape final delivery outcomes.

“The Commission has continued to enforce the provisions of the Domestic Crude Supply Obligation in accordance with the Petroleum Industry Act. While producers have demonstrated strong compliance by offering volumes above allocated thresholds in several instances, actual supplies to domestic refiners remain constrained by prevailing commercial dynamics.”

A month-by-month breakdown showed that in January, the Commission mandated producers to supply 22.6 million barrels to local refineries following consultations with industry stakeholders. Producers exceeded the target, offering 25.3 million barrels, an increase of 11.9 per cent or 2.7 million barrels above the requirement.

Despite this, only 9.2 million barrels were eventually delivered to refiners.

In February, allocations dropped slightly to 20.5 million barrels, while producers offered 19.8 million barrels, falling short of the target by about 700,000 barrels. Actual supply declined marginally to 9.1 million barrels.

March recorded a modest improvement, with deliveries rising to 10.1 million barrels. During the month, 18.8 million barrels were allocated, while producers significantly exceeded expectations by offering 23.6 million barrels, about 25.5 per cent above the target.

Explaining the recurring shortfall between volumes offered and actual deliveries, the Commission attributed the gap largely to pricing disagreements between producers and domestic refiners.

It stressed that transactions under the DCSO framework are guided by a “willing buyer, willing seller” principle, which ultimately determines whether offered crude is lifted.

“The current framework allows for market-driven negotiations between producers and refiners. As such, pricing differentials have continued to influence the pace and volume of crude deliveries,” Akinkuotu stated.

Despite the supply gaps, the Commission reaffirmed its commitment to improving crude availability for local refining as part of the federal government’s energy security drive.

“Leveraging the framework of the Petroleum Industry Act, 2021, the Commission remains focused on sustaining recent gains in crude oil production while refining the DCSO methodology to enhance transparency and efficiency.

“Our objective is to ensure that domestic refineries are adequately supplied in line with national energy sufficiency goals.”

The DCSO was introduced under the PIA to prioritise crude supply to domestic refineries and reduce Nigeria’s reliance on imported petroleum products. However, the latest figures highlight ongoing structural and commercial challenges that continue to limit the full realisation of the policy’s objectives.