New data revealing Nigeria’s export of 55.39 million barrels of crude oil in the first two months of 2026 underscores a critical and ongoing imbalance between the nation’s robust export commitments and its struggling domestic refining capacity. This significant outflow of crude comes at a time when key domestic processing facilities, most notably the Dangote Petroleum Refinery, are facing substantial shortfalls in feedstock, forcing them to rely on costly imports and operate below optimal levels. The situation highlights a complex interplay of national production, export strategies, and the imperative to satisfy burgeoning domestic demand for refined petroleum products.

January and February 2026 Export Figures Detail Persistent Imbalance

According to figures released by the Central Bank of Nigeria on April 20, 2026, Nigeria exported a total of 55.39 million barrels of crude oil during the initial two months of the year. This figure is broken down into 31.31 million barrels in January and 24.08 million barrels in February. Business Insider Africa reports that average daily production during this period stood at 1.46 million barrels in January and 1.31 million barrels in February. Concurrently, daily exports averaged 1.01 million barrels in January and 0.86 million barrels in February.

The cumulative crude oil output for January and February reached 81.94 million barrels. After accounting for the export volumes, this leaves approximately 26.55 million barrels of crude oil potentially available for domestic refining. However, this allocation falls significantly short of the requirements for Nigeria’s increasingly important refining sector, particularly the massive Dangote Petroleum Refinery, which requires a consistent and substantial supply to operate at its intended capacity.

The Dangote Refinery’s Struggle for Domestic Feedstock

The persistent challenge of securing adequate domestic crude supply has been a recurring issue for the Dangote Petroleum Refinery, a $20 billion state-of-the-art facility located in Lekki. Despite Nigeria’s position as Africa’s leading oil producer, the refinery has repeatedly cited a deficit in locally sourced crude, compelling it to turn to the international market for feedstock. This reliance on imports is not only economically disadvantageous but also contradicts the spirit and intent of policies designed to bolster domestic refining.

A senior source within the refinery, speaking anonymously, articulated the gravity of the situation: "The refinery continues to operate below optimal capacity due to inadequate domestic crude supply, despite clear provisions under the Petroleum Industry Act prioritizing local demand." This statement underscores a critical disconnect between policy objectives and operational realities on the ground.

From October 2025 to mid-March 2026, the Dangote Petroleum Refinery reportedly faced a cumulative crude oil shortfall of approximately 79.53 million barrels. To operate at its full designed capacity, the refinery requires an estimated 19.77 million barrels of crude oil per month. Over the aforementioned five-month period, the refinery received only about 26.9% of its estimated requirement of 108.74 million barrels, highlighting the severe nature of the supply deficit.

The "Naira-for-Crude" Policy and Export Dominance

The ongoing imbalance persists despite the implementation of the "naira-for-crude" policy, a measure intended to facilitate the allocation of crude oil to domestic refineries in exchange for refined products. The policy’s effectiveness appears to be hampered by the continued prioritization of exports, which often yield more immediate foreign exchange earnings for the nation. This strategic choice, while understandable from a macroeconomic perspective, directly impacts the viability and operational efficiency of domestic refining infrastructure.

The situation is further complicated by the fact that even when crude is allocated for domestic use, refineries like Dangote often find themselves paying global market prices, or a significant portion thereof, despite partial naira payments. This adds to their operational costs and reduces their competitiveness compared to refineries operating in regions with more stable and cost-effective feedstock arrangements. The refinery has indicated that its reliance on imported feedstock, driven by these domestic supply shortages, has significantly driven up its operational expenses.

Impact on Domestic Fuel Prices and Consumer Costs

The strain on domestic supply chains and refining capacity has had a tangible effect on the price of refined petroleum products within Nigeria. Petrol prices have experienced considerable volatility, surging above N1,300 per liter (approximately $0.87 USD at prevailing exchange rates) before experiencing a slight decrease to around N1,250 per liter (approximately $0.83 USD).

The Dangote Petroleum Refinery has attributed this price volatility directly to the limited availability of domestic crude. The refinery stated that it receives an average of only five crude oil cargoes per month from the Nigerian National Petroleum Company (NNPC), a figure substantially lower than the approximately 13 cargoes it requires monthly to meet its operational needs. This scarcity, coupled with the aforementioned payment structures, places a significant burden on the refinery and, by extension, on the domestic fuel market.

Calls for Prioritizing Local Refineries and Policy Interventions

Industry stakeholders are increasingly vocal in their calls for greater prioritization of domestic crude supply to local refineries. Eche Idoko, representing the Crude Oil Refiners Association of Nigeria, emphasized the critical importance of a steady and adequate feedstock supply for the profitability and sustainability of refining operations.

"If we get crude, of course, we will make gains; we have our cash flow," Idoko stated. "If we get regular products like we ought to do, yes, we would make gains. But without products, we are not making gains. If the oil producers give us feedstock, we will make gains. That’s how good the refining business is." This sentiment highlights the latent potential of Nigeria’s refining sector, which is currently constrained by fundamental supply chain issues.

The Crude Oil Refiners Association of Nigeria is reportedly preparing to advocate for increased feedstock allocation as domestic production levels potentially improve. Their argument is that a consistent supply of crude oil is not just beneficial but essential for the operational viability and profitability of refineries, especially for modular plants that may have less flexibility in sourcing alternative feedstocks.

Broader Implications for Nigeria’s Energy Sector

The ongoing challenges faced by domestic refineries have far-reaching implications for Nigeria’s energy security, economic diversification, and its ability to maximize the value derived from its abundant oil resources.

Economic Diversification: Nigeria’s economy remains heavily reliant on crude oil exports. Developing a robust domestic refining capacity is a key strategy for economic diversification, creating jobs, adding value to crude oil, and reducing the nation’s dependence on imported refined products. The current situation hinders this crucial diversification effort.

Energy Security: A strong domestic refining sector enhances energy security by ensuring a stable supply of fuel for the nation’s needs, reducing vulnerability to global price shocks and supply disruptions. The current reliance on imports makes Nigeria susceptible to external factors.

Foreign Exchange Management: While crude oil exports generate significant foreign exchange, importing refined products consumes it. A functional domestic refining industry would reverse this flow, potentially leading to a net positive impact on foreign exchange reserves.

Investment and Industrial Growth: The success of large-scale investments like the Dangote Refinery is crucial for attracting further domestic and foreign investment in the downstream oil and gas sector. Persistent feedstock issues can deter future investment, signaling operational risks.

Petroleum Industry Act (PIA) Implementation: The situation raises questions about the effective implementation of the Petroleum Industry Act, which was enacted with the aim of reforming and strengthening Nigeria’s oil and gas sector, including provisions to support domestic refining. Ensuring that the Act’s objectives translate into tangible improvements in feedstock availability is paramount.

Global Oil Market Dynamics: While Nigeria’s domestic issues are the primary focus, the global oil market remains a significant factor. Fluctuations in international crude prices, global refining margins, and geopolitical events can influence Nigeria’s export decisions and the cost of imported feedstocks. However, the core issue highlighted by the data is the internal allocation and prioritization of Nigeria’s own resources.

A Look Ahead

The coming months will be critical for Nigeria’s energy sector. Continued export volumes alongside domestic refining challenges suggest that a re-evaluation of crude allocation strategies and a concerted effort to address the root causes of supply shortfalls are urgently needed. This may involve enhanced collaboration between the NNPC, domestic oil producers, and the refining companies, potentially through revised contractual agreements, improved logistics, and a clearer enforcement of domestic supply obligations under existing legislation. The ability of Nigeria to successfully leverage its vast oil wealth for domestic development hinges on its capacity to efficiently process its crude oil within its own borders, a goal that remains significantly challenged by the current export-driven landscape.