Nigeria is considering reforms to its crude oil allocation and pricing system aimed at improving access to feedstock for domestic refineries, including the Dangote Refinery, the Crude Oil Refinery-owners Association of Nigeria (CORAN) has said.
The proposed reforms could reduce the cost of crude for refiners and improve the availability of locally produced crude for domestic processing.
Dangote Refinery has previously said Nigeria’s current pricing structure adds about $3 to $4 per barrel to its crude costs because purchases are often routed through the trading arms of oil producers.
Under one proposal, producers linked to international oil companies could deliver crude directly to nearby refineries, with the volumes reconciled later at the terminal. CORAN said this could reduce dependence on long-distance pipelines and make crude more readily available to refineries.
Another proposal would allow refiners that collect crude directly from production facilities to receive discounts reflecting freight and handling costs included in Brent-linked pricing but not actually incurred by the refiners.
CORAN spokesperson Eche Idoko said the proposed changes could benefit both oil producers and refiners.
The reforms are expected to be discussed this week as part of a regulator-led review of Nigeria’s domestic crude supply obligation, which requires oil producers to supply local refineries before exporting crude.
Data released by the Nigerian Upstream Regulatory Commission (NUPRC) showed that producer compliance with the domestic crude supply framework increased to more than 90%, up from less than 43% in the previous quarter.
However, NUPRC officials said implementation of the proposed changes would require adjustments to account for differences in crude quality and pricing.
The reforms could help strengthen domestic refining and reduce some of the supply constraints affecting the 650,000-barrel-per-day Dangote Refinery, Africa’s largest oil refinery.
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