Rising Crude Production and Calls for Action
Local refiners and organised labour in Nigeria have renewed their calls for increased crude supply and lower fuel prices, following confirmation that the country’s oil production has risen to about 1.8 million barrels per day. The increase in output is seen as a positive development, but stakeholders are urging more action to ensure that this rise translates into improved feedstock availability for domestic refineries and relief for consumers.
The spokesperson for the Crude Oil Refiners Association of Nigeria (CORAN), Eche Idoko, stated that refiners would intensify their demand for more crude with the reported improvement in national production. In a statement issued by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), it was noted that daily oil production had reached 1.8 million barrels per day (mbpd) and the commission aims to reach 2 mbpd.
Idoko highlighted that while the Nigerian National Petroleum Company Limited (NNPC) plans to increase crude supply to the Dangote refinery in Lagos from five to seven cargoes, this number is still far below what the refinery requires for daily production. He emphasized that the issue remains the implementation of domestic crude supply obligations (DCSO), which is critical for ensuring adequate supply to local refineries.
Challenges in Domestic Crude Supply
Idoko pointed out that even though rising production could help local refineries, the consistent supply of crude is essential for improving operations and profitability. He explained that modular refineries cannot make profits without sufficient feedstock locally. “If we get crude, of course, we will make gains; we have our cash flow,” he said. However, he stressed that without proper pricing, the DCSO cannot be effectively implemented.
He also mentioned that pricing has been a major issue between producers and refiners. “For a modular refinery to break even, the pricing has to be reasonable,” he added. With current crude prices being high, it is not favorable for smaller refineries.
The NUPRC chief executive, Oritsemeyiwa Eyesan, recently revealed the new production figure during a visit to the Federal Ministry of Finance in Abuja. The Minister of Finance, Wale Edun, commended the commission for the improvement, stating that it aligns with the mandate of President Bola Tinubu.
NUPRC’s Perspective on Production Growth
According to sources within the NUPRC, the rise in production began towards the middle of March when companies undergoing maintenance resumed operations. They expressed optimism that oil production would remain at 1.8 mbpd going forward, barring any disruptions. However, they noted that crude supply to local refineries is often hampered by disagreements on pricing.
Labour’s Response and Concerns
Meanwhile, the Nigeria Labour Congress (NLC) responded to the news, stating that the reported rise in crude oil production should translate into increased supply to domestic refineries and lower fuel prices. They warned that failure to achieve this would expose inefficiencies in economic management.
A senior NLC official, speaking in confidence, highlighted concerns about transparency in Nigeria’s oil measurement system. “Nigeria is the only country where they say it is difficult for us to meter our production from the warehouse. They only do that from the flow stations,” the source said. This lack of comprehensive metering creates uncertainty around accurate production data.
The official argued that if production has genuinely increased, the government now has greater leverage to prioritise domestic refining. “Given the global crisis, if we are producing more now, we can supply our domestic refiners like Dangote Refinery and others with more crude so that they can refine and give us more white products and diesel,” he said.
Economic Implications and Market Regulation
Labour further argued that higher oil prices combined with increased production should generate significant windfall revenues for Nigeria. “With oil prices above $100 per barrel and the budget benchmark around $64, we are talking about roughly a $40 to $50 difference,” the source said. This could lead to substantial additional revenues for the government.
However, the union questioned how such revenues would be managed. “What they do with this windfall is another question altogether,” the official added. Labour warned that unless increased oil production leads to improved domestic refining capacity, stronger regulation, and consumer price relief, Nigerians may not feel any positive economic impact.
The NLC maintained that increased crude availability for local refining should naturally lead to lower pump prices of Premium Motor Spirit. “If production has increased, then Nigeria has more leverage to export and also service domestic refiners,” the source said. “And if they service domestic refiners, it means that the price of PMS will come down at the pump.”
Conclusion
As Nigeria continues to see an increase in crude oil production, the call for action from both refiners and labour unions highlights the need for effective implementation of policies and transparent market practices. The potential benefits of increased production—such as improved refining capacity, lower fuel prices, and enhanced government revenues—are clear, but achieving these outcomes will require coordinated efforts and regulatory oversight.
