In a significant strategic pivot, the Organisation of the Petroleum Exporting Countries (OPEC) has instructed Nigeria’s oil producers to stop crude exports and instead direct their efforts toward domestic refining operations. The cartel’s admonition comes as Nigeria grapples with the paradox of being a major crude‐oil exporter while simultaneously remaining heavily reliant on imports of refined petroleum products.
The directive places a spotlight on an enduring structural weakness in Nigeria’s hydrocarbons sector. While the country produces large volumes of crude, its local refineries languish in under-utilisation due to feedstock shortages, logistical bottlenecks and policy incoherence. Indeed, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) recently reported that only about 18 per cent of crude volumes in the first quarter of 2025 were allocated to domestic refineries, a stark indication of the imbalance between export and internal refining supply.
By urging local producers to invert this export-oriented model, OPEC is effectively advocating a deepening of Nigeria’s value chain from raw crude to intermediate and finished petroleum products. The rationale is rooted in both economic and energy-security concerns: refining crude domestically can reduce import dependency, trap value in the national economy and drive downstream industrial growth. At the same time, the policy shift may reflect OPEC’s recognition that Nigeria’s abundant crude could help ease global refined-product tightness if it were processed domestically and then exported as refined fuels.
Nevertheless, the path to reform is far from smooth. Domestic refiners cite snags in the implementation of the Domestic Crude Oil Supply Obligation (DCSO) framework under the Petroleum Industry Act 2021, which obliges crude producers to supply local refineries. According to industry association statements, certain modular refineries have been allocated “zero” crude for months, forcing them to import feed-stocks instead and blunting their production potential.
On the flip side, producers favour exports because foreign buyers pay in hard currency, making exports immediately profitable and more attractive than supplying local refiners who pay in naira and often await delayed payments. This dynamic exacerbates currency- and cash-flow pressures within the downstream sector.
OPEC’s recent instruction thus highlights a turning point for Nigeria to realise its refining ambitions, anchored by major facilities such as the Dangote Petroleum Refinery (650,000 bpd nameplate capacity). It must align crude supply, domestic refining investment and export strategy in concert.
By shifting from raw crude exports toward domestic refining, Nigeria stands to retain far more value within the economy, reduce annual foreign-exchange outflows tied to fuel imports (Africa imports over 70 % of its petrol) and strengthen the naira, thereby supporting industrialisation and mitigating trade-deficit pressures.
