Oyedele Says Domestic Refineries Face Crude Supply Gap Despite 1.8m bpd Output
Taiwo Oyedele says contractual obligations, production costs and royalties leave less than 700,000 barrels freely available each day.
Nigeria's headline crude production figure does not translate into an equivalent volume that can be directed to domestic refineries, Finance Minister and Coordinating Minister of the Economy Taiwo Oyedele has said.
Speaking during a Channels Television interview on Friday, Oyedele said the country currently produces about 1.8 million barrels of crude per day. However, he explained that much of that output is tied to production-sharing contracts and joint ventures with oil companies, meaning the Federal Government does not have unrestricted control over the entire volume.
The amount available to government is reduced further by the cost of extracting the crude and by royalty obligations before the remaining share can be considered for allocation. On that basis, Oyedele said fewer than 700,000 barrels per day are currently free for government-directed supply to buyers, including the Dangote Refinery and other domestic processors.
His comments were made amid proposals that government should intervene more aggressively in crude supply to local refiners, including suggestions that crude could be offered at a discounted production-linked price. Oyedele rejected the assumption that government has enough uncommitted crude to support such an arrangement at the scale being proposed.
He pointed to the Dangote Refinery's use of imported crude as evidence of the current domestic supply constraint. According to the minister, the challenge is not simply the amount Nigeria produces, but how much remains available after contractual, operational and fiscal commitments have been met.
Oyedele also discussed the naira-for-crude policy introduced under President Bola Tinubu. He said the arrangement has helped create greater stability for domestic refining, although the quantity available through the system is still below what local processors require. He expects the situation to improve if national crude production rises and more barrels become available for domestic allocation.
The minister said his preferred long-term outcome would be for Nigeria to process all of its crude domestically and export refined petroleum products rather than mainly shipping crude abroad. Reaching that point, he suggested, would depend on higher production and sufficient feedstock for the country's refineries.
The discussion comes as petrol pricing remains under renewed scrutiny following the 2023 removal of subsidy and the Federal Government's more recent 30-day petrol discount at NNPC Limited retail outlets. While some critics have called for stronger intervention, Oyedele's argument is that domestic refinery policy must account for the limited quantity of crude that government can actually allocate after existing obligations are settled.