By Obinna Uballa
Despite being Africa’s largest crude oil producer, operators of refineries in the country, including Dangote, imported crude oil worth a staggering N5.734 trillion between January and December 2025, as domestic refineries continued to grapple with persistent feedstock shortages.
The figure, observers say, underscores a widening paradox in the country’s oil sector, where strong upstream production contrasts sharply with limited domestic refining supply.
The Federal Government’s naira-for-crude policy, introduced in October 2024 to prioritise local supply and reduce dependence on foreign exchange, has struggled to deliver its intended results.
Under the arrangement, refiners were supposed to pay for crude in naira, while the Nigerian National Petroleum Company (NNPC) managed the foreign exchange implications. However, according to a report by Punch Newspaper, a combination of structural, commercial, and operational factors has undermined the initiative.
Nigeria produced 530.41 million barrels of crude in 2025, generating about N55.5 trillion in revenue from sales. Yet, domestic refineries, including modular plants and large-scale facilities such as the Dangote Refinery, still imported significant volumes to maintain operations.
According to the National Bureau of Statistics (NBS), no crude imports were recorded in 2024, highlighting a 100 per cent year-on-year surge in 2025.
Quarterly data show that crude imports rose sharply in the first three quarters, from N1.19 trillion in Q1 to N2.403 trillion in Q3, before falling to N499.75 billion in Q4. Monthly figures reveal wide fluctuations, with imports peaking at N1.28 trillion in July, reflecting acute supply constraints. The NBS report attributes this pattern to inconsistent domestic allocation and refinery demand.
The Crude Oil Refinery-Owners Association of Nigeria (CORAN) confirmed that refineries increasingly turn to imports to survive. CORAN Publicity Secretary, Eche Idoko, explained that modular refineries often receive “zero allocation” under the Domestic Crude Supply Obligation framework, leaving them unable to operate at full capacity. For instance, the OPAC refinery with a 10,000-barrel capacity produces only about 1,000 barrels daily, often shutting down for months due to lack of feedstock. Even the Dangote Refinery has recently operated at only 60 per cent of capacity because of insufficient crude supply.
Dangote Petroleum Refinery & Petrochemicals clarified that it currently receives five monthly cargoes of crude from NNPC under the naira-for-crude scheme, far short of the 13 cargoes required to meet demand. The shortfall is supplemented with imports purchased from international suppliers at prevailing market rates.
Experts say structural issues and legacy arrangements exacerbate the problem. International oil companies (IOCs) operating in Nigeria often prefer to export crude under long-term contracts denominated in dollars, rather than supply domestic refineries, which face currency risks, pricing disputes, and policy uncertainties.
Energy analyst Jeremiah Olatide criticised the naira-for-crude policy, saying it has had little impact on domestic supply or fuel prices. “Most refineries still source the bulk of their crude internationally,” he said, noting that even locally supplied crude is priced according to global benchmarks, limiting the policy’s effectiveness.
Professor Dayo Ayoade, an energy expert, highlighted broader upstream constraints, including underinvestment over the past two decades, forward sales of crude by NNPC to secure loans, and the prioritisation of exports over domestic needs. He emphasised that modern refineries require a blend of crude grades, making some level of importation unavoidable.
Looking ahead, analysts warn that crude importation is likely to continue into 2026 due to pipeline vandalism, logistical bottlenecks, theft, and insufficient local production. “Even with new refineries, the question remains: where will the crude come from?” Ayoade asked, underlining the persistent misalignment between upstream output and downstream demand.
Nigeria’s N5.734 trillion crude import bill in 2025 illustrates that the challenge in the country’s oil sector is no longer just refining capacity, but access to feedstock itself. Aligning domestic production with refinery demand will be crucial for the government’s goal of energy self-sufficiency and long-term stability in the petroleum sector.
With local refineries dependent on imported crude, the effectiveness of policies like naira-for-crude remains in question, highlighting the need for comprehensive reforms to ensure reliable feedstock supply, stabilise fuel prices, and maximise the value of the nation’s hydrocarbon resources.
