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© OKN MEDIA PUBLISHING 2022 - All rights reserved
Energy & OilTop stories

Oil Producers Accused of Diverting Crude Oil Meant for Local Refineries

Genesis Obong
By Genesis Obong
Published: February 5, 2025
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4 Min Read
Crude Oil Diversion
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The Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) has levelled serious accusations against oil producers, alleging they are diverting a significant portion of crude oil earmarked for domestic refineries. This diversion, according to PETROAN, is hindering local refining efforts and contributing to the nation’s economic woes.

In a statement released by its Publicity Secretary, Joseph Obele, PETROAN commended the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) for its recent ban on the export of crude oil allocated to local refineries. This crucial step, the association believes, is a vital move towards boosting domestic refining capacity, reducing reliance on imported refined products, and alleviating pressure on the nation’s foreign exchange reserves.

“The exportation of crude oil meant for domestic refining has been a major racketeering scheme,” Obele declared. “Producers and traders have prioritised quick foreign exchange proceeds over the government’s efforts to revitalise local refineries. This has resulted in the unfortunate abandonment of many refineries across the country.”

PETROAN estimates that approximately 500,000 barrels of crude oil per day, designated for domestic refining, are instead finding their way into the international market. This blatant disregard for the nation’s economic interests, the association argues, has severely hampered the growth of local industries reliant on refined petroleum products.
Read Also: Nigerian Refineries Boost Output, Signal Reduced Petrol Imports

The potential benefits of increased domestic refining are substantial. PETROAN emphasises that local refining would not only enrich the petrochemical and agricultural sectors but also contribute to a more equitable distribution of wealth and facilitate Nigeria’s transition from a raw material exporter to a manufacturer and supplier of value-added products.

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“This policy will guarantee sufficient refined petroleum products in the country, leading to price reductions and better days ahead for Nigerian consumers,” stated Billy Gillis-Harry, PETROAN’s National President. He urged the NUPRC to swiftly enforce the ban and take decisive action against any refineries, cargo vessels, or companies found in violation of this critical policy.

However, the path to increased domestic refining is not without its challenges. A recent stakeholders’ meeting revealed a complex web of accusations and counter-accusations between refiners and producers. Oil producers argued that refiners often fail to meet the necessary commercial and operational requirements, leaving them with no choice but to explore alternative markets to avoid operational bottlenecks.

Refiners, on the other hand, countered these claims, asserting that it is the oil producers who are consistently failing to meet their supply obligations. This, they argue, has forced them to seek alternative sources of feedstock, further complicating the domestic refining process.

This intricate web of challenges underscores the need for a collaborative and cooperative approach between all stakeholders. Addressing the concerns of both producers and refiners is crucial to ensure the successful implementation of the domestic crude supply obligation and the revitalization of Nigeria’s refining industry.

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TAGGED:Crude OilEnergyOil ProducersRefineries
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ByGenesis Obong
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Genesis Obong is a Journalist with relevant experience in Business, Finance and Economic matters in Nigeria and across the West African space.
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