The Federal Government is considering changes to crude allocation and pricing rules to improve feedstock access for Nigerian refiners, including the Dangote Refinery. According to the Crude Oil Refinery-owners Association of Nigeria (CORAN), these adjustments aim to address the cost and supply challenges facing local operators under the Domestic Crude Supply Obligation framework.

Dangote Refinery, which has a capacity of 650,000 barrels per day, has previously stated that Nigeria's pricing structure adds between $3 and $4 per barrel to feedstock costs. This premium exists because crude purchases are routed through the trading arms of producers rather than being sold directly.

Direct Delivery and Freight Discounts Proposed

CORAN spokesperson Eche Idoko stated that the proposed changes will be discussed during a regulator-led review of the domestic crude supply obligation. This framework requires oil producers to supply local refineries before exporting crude.

One proposal would allow a producer linked to an international oil company's network to deliver crude directly to a nearby refinery. The volumes would then be reconciled later at the terminal, reducing reliance on trunklines and bringing crude closer to refiners.

Another proposal would allow refiners that lift crude directly from production facilities to receive a discount. This discount would reflect freight and handling costs embedded in Brent-linked pricing that are not actually incurred by the refiners.

Domestic Supply Compliance Rises to Ninety Percent

In May, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) reported that Nigeria supplied 28.5 million barrels of crude oil to domestic refineries in the first quarter of 2026. This volume was significantly below the 61.9 million barrels allocated for the period.

NUPRC data showed producer compliance with the domestic crude supply framework rose to more than 90%, up from less than 43% in the previous quarter. However, this compliance metric measures actual deliveries against volumes allocated by the regulator, rather than the total refinery demand met.

Under the current framework, sales are agreed on a willing-buyer, willing-seller basis. Dangote Refinery CEO David Bird raised concerns in March over a significant shortfall in crude allocations under the Federal Government's Crude-for-Naira programme, noting the refinery received only 5 crude cargoes instead of the expected 15.

Alternative Subsidy Models and Windfall Projections

In April, economist and Managing Director of Financial Derivatives Company, Bismarck Rewane, proposed a shift in Nigeria's fuel subsidy framework. He advocated for a refinery-based model that channels benefits directly to consumers.

Rewane explained that this model would involve the government supplying crude oil to domestic refiners at a controlled price. In turn, this would ensure that refined petroleum products are sold to consumers at lower rates.

Additionally, the Nigerian Economic Summit Group (NESG) projected that escalating geopolitical tensions in the Middle East could deliver a massive oil revenue windfall to Nigeria. This windfall could reach as high as N30.2 trillion if the conflict between Iran and Israel becomes prolonged.