Domestic refineries in Nigeria recorded a crude oil supply shortfall of 33.4 million barrels in the first quarter (Q1) of 2026.
According to data released by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) on Tuesday, May 5, a total of 61.9 million barrels of crude oil was allocated to domestic refineries during the quarter under the Domestic Crude Supply Obligation (DCSO) enshrined in the Petroleum Industry Act 2021.
The DCSO, as contained in the PIA 2021, mandates local producers to reserve a certain volume of crude oil for supply to domestic refineries as part of the goal to ensure adequate feedstock needed to boost local refining and energy sufficiency.
The report indicates that actual supply to local refineries was, however, 28.5 million barrels as of the end of Q1 2026.
This means less than half of the committed volumes were supplied. The supply gap is even wider when compared to volumes offered by producers, which were put at 68.7 million barrels in the quarter, reflecting a gap of 40.2 million barrels between what was offered and what refiners received.
A breakdown of the monthly allocations and actual deliveries shows that NUPRC mandated producers to supply 22.6 million barrels to local refiners in January. While the producers offered to supply 25.3 million barrels, only 9.2 million barrels were ultimately supplied to local refiners, reflecting a supply shortfall of 13.4 million barrels when compared to the volume allocated.
In February, the Commission allocated 20.5 million barrels to local refineries, but producers, who offered 19.8 million barrels, delivered only 9.1 million barrels, indicating a shortfall of 11.4 million barrels.
In March, the report shows that NUPRC reduced allocation to 18.8 million barrels. However, the actual supply was 10.1 million barrels. This reflects a slight increase from 9.2 million barrels supplied in January and 9.1 million barrels in February.
However, it is still a shortfall of 8.7 million barrels when compared to the volume allocated in March.
The supply conversion rate for the quarter ranged between 36 per cent and 46 per cent, underscoring the weak conversion of commitments into actual deliveries.
Highlighting the reason for the shortfall between volumes offered and actual deliveries, a press statement signed by Eniola Akinkuotu, Head, Media and Corporate Communication, NUPRC, said it was mainly due to “pricing gaps between producers and domestic refiners.”
The Commission stressed that transactions under the DCSO framework operate on a “willing buyer, willing seller” basis, as established by the PIA 2021.
Analysts note that this market-based approach, while protecting commercial terms, has left millions of barrels stranded despite availability. The pricing gaps have stalled supply even when crude is offered above mandated volumes, as indicated in the report.
Commenting on the NUPRC data, analysts at Comercio Partners said it “reveals a critical bottleneck in Nigeria’s downstream sector.”
The analysts said the supply shortfall, which ranged between 36 and 46 per cent in Q1 2026, indicates that the “willing buyer, willing seller” framework under the PIA is failing to boost crude oil supply to local refineries.
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It noted that there are persistent pricing disagreements between crude producers and local refiners. While producers are reluctant to accept domestic prices, they consider below what international export parity offers, domestic refiners are constrained by high feedstock costs.
The analysts called on NUPRC to ensure a transparent pricing formula or implement what it called “a mandated discount mechanism” to curb pricing disagreements and boost supply to local refineries.
“Unless the NUPRC intervenes with a transparent pricing formula or a mandated discount mechanism, the Domestic Crude Supply Obligation (DCSO) will remain an aspirational target rather than an enforceable obligation. This supply gap signals continued reliance on imported petroleum products and sustained pressure on FX,” the analysts further stated.
Impact on Domestic Refining
There are concerns that crude supply shortfalls affect Nigeria’s refining capacity.
The Dangote Refinery, considered Africa’s largest, has reportedly been forced to secure crude oil supply from international markets to supplement inadequate domestic feedstock.
The refinery had said in March that it receives an average of five cargoes a month from NNPC, instead of the 13 cargoes it requires to boost feedstock and produce adequate volume for domestic consumption.
“We therefore end up procuring foreign exchange at open market rates to pay for crude cargoes purchased from local and international traders,” the refinery had stated.
Industry analysts note that the shortfall constrains refinery output and weakens Nigeria’s push to capture more value from its oil production while reducing reliance on imported fuels.
Despite the developments, NUPRC said it remains committed to achieving energy sufficiency in the country, adding that it would continue to refine the DCSO methodology “to enhance transparency and efficiency, ensuring that local refineries are supplied as committed.”
Victor Ezeja is a passionate journalist, scholar and analyst of socioeconomic issues in Nigeria and Africa. He is skilled in energy reporting, business and economy, and holds a master's degree in Mass Communication. He can be reached via @VICTOREZEJA on X