In the bid to ease crude oil offtake by domestic refiners, address pricing and logistics challenges, the Nigerian government is taking a look at proposals for direct crude supplies and discounts to domestic refineries.

The Crude Oil Refinery-owners Association of Nigeria (CORAN), revealed that the proposals touch on allowing producers to deliver crude directly to nearby refineries and granting refiners a discount for transportation and handling costs embedded in the price of crude.

This was disclosed in a report by Reuters on Wednesday.

The report read, “The Federal Government is considering changes to crude allocation and pricing rules to improve feedstock access for its refiners, including Dangote Refinery.”

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The review comes as compliance with the domestic crude supply framework improved sharply in the second quarter of 2026, although refiners continue to complain that the cost and structure of domestic crude transactions make locally sourced feedstock expensive.

A spokesperson for CORAN, Eche Idoko, told Reuters that one of the proposals would enable producers, particularly those operating within international oil companies’ networks, to deliver crude directly to refineries located close to their production facilities.

Under the arrangement, the crude volumes could subsequently be reconciled at the relevant terminal, potentially reducing the need to transport the crude through longer trunkline routes.

Idoko said the proposal would bring crude closer to refineries while reducing some of the logistics costs associated with domestic supply. A second proposal would address the pricing component of domestic crude transactions.

Under the arrangement, refiners that lift crude directly from production facilities could receive a discount corresponding to freight and handling costs incorporated into the Brent-linked price of crude but which the refiners do not actually incur.

Idoko described the proposed arrangement as beneficial to both sides of the transaction. “Under one proposal, a producer linked to an IOC’s network could deliver crude directly to a nearby refinery, with volumes reconciled later at the terminal.

“This would reduce reliance on trunklines and bring crude closer to refiners. A second proposal would allow refiners that lift crude directly from production facilities to receive a discount reflecting the freight and handling costs embedded in Brent-linked pricing but not actually incurred by them. This could be a win-win for both the producers and refiners,” the report noted.

The proposed changes are coming against the backdrop of complaints by local refiners that the pricing structure for domestic crude makes their feedstock more expensive than necessary.

Recall that the Dangote Petroleum Refinery and Petrochemicals (DPRP) had estimated that Nigeria’s pricing structure could add between $3 and $4 per barrel to the cost of crude purchased by domestic refiners because transactions are often routed through trading arms of producers.

Energy analysts have similarly identified pricing, rather than the physical availability of crude, as one of the major challenges facing domestic refiners. The issue is particularly significant for the Dangote Refinery, Africa’s largest refinery, which has a nameplate capacity of 700,000 barrels per day.

Although the refinery has significantly increased its operations, securing adequate volumes of locally produced crude at competitive prices remains a key issue for the development of Nigeria’s refining industry.

Nigeria has met and exceeded its Organisation of Petroleum Exporting Countries (OPEC) quota of 1.5mbpd for the third consecutive month.

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) disclosed this in a statement on Tuesday.

The statement has it that in July 2026, Nigeria produced 1.505mbpd of crude oil and 0.17mbpd of condensate, making combined daily production to 1.67mbpd.

During the month under review, the daily peak production of crude oil and condensate was 1.78mbpd, while the lowest daily production was 1.57mbpd.

Although Nigeria met its OPEC quota in July, the statistics show that, on a month-on-month basis, production fell by 4 per cent.

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The NUPRC attributed the decline in production to operational challenges at the Erha and Akpo fields, which affected output during the period under review.

These disruptions constrained production volumes and contributed significantly to the overall reduction in national crude oil output.

Despite the challenges, production operations across most other producing assets remained relatively stable, with operators implementing measures to maintain production efficiency and minimise the impact of operational constraints.

Crude oil and condensate supply to local refineries rose by 88.4 percent to 53.7 million barrels in the second quarter of 2026, Q2’26, from 28.5 million barrels in the first quarter, Q1’26, the Nigerian Upstream Petroleum Regulatory Commission, NUPRC, has said.

The commission, in its Q2 2026 statistics on the enforcement of the Domestic Crude Supply Obligation, DCSO, said the 53.7 million barrels supplied to domestic refiners represented 97.4 percent performance during the quarter.

The DCSO is being enforced by the NUPRC pursuant to Section 109 of the Petroleum Industry Act, PIA, which provides for the supply of crude oil produced in Nigeria to domestic refineries.

According to the commission, the increase in crude supply coincided with higher domestic oil production and the execution of long-term crude supply agreements supported by bankable Sales and Purchase Agreements, SPAs, between producers and domestic refiners.

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The NUPRC said it conducts monthly consultations with crude oil producers and licensed domestic refineries, following which specific volumes of crude oil and condensate are allocated to producers for supply to local refiners.

It, however, noted that the DCSO operates on a “willing buyer, willing seller” basis in accordance with the PIA, which affects the volumes eventually supplied and accepted.

In April, the NUPRC allocated 18.13 million barrels to producers, while producers offered 19.31 million barrels to domestic refiners. Actual supply stood at 20.88 million barrels, representing 114.9 percent performance against the allocation.

In May, the commission allocated 18.78 million barrels, while producers offered 23.19 million barrels to local refiners. Actual supply fell to 14.23 million barrels, representing 75.8 percent compliance.

Supply increased in June, with the NUPRC allocating 18.17 million barrels to producers, while producers offered 26.84 million barrels to refiners. Actual supply stood at 18.61 million barrels, representing 102.4 percent performance.

The commission said the figures showed that the DCSO was being actively administered and enforced, adding that the improvement was supported by increased crude production and stronger commercial arrangements between producers and refiners.

At the refinery level, the NUPRC said Dangote Refinery required 63 million barrels of crude in Q2, while producers offered 68.1 million barrels.

The 68.1 million barrels offered represented 98 percent of the total crude volumes offered by producers during the quarter.

However, the refinery accepted 52.6 million barrels, representing 78 percent of the volume offered to it.

The NUPRC said it remained committed to supporting the Federal Government’s objective of achieving energy sufficiency by leveraging the PIA to sustain the growth in crude oil production and continuously enforce the DCSO.