Modular refineries shun crude as Dangote takes 98% of domestic supply in Q2 2026

Nigerian modular refinery operators did not lift any crude under the Domestic Crude Supply Obligation in the second quarter of 2026, citing unrealistic commercial terms. The Crude Oil Refinery Owners Association of Nigeria (CORAN) says pricing benchmarks made crude too costly for smaller refiners.

Why modular refineries refused crude

CORAN spokesman Eche Idoko said international pricing benchmarks such as Platts, Brent and West Texas Intermediate embed freight, insurance and delivery costs that modular refineries do not need. Those refineries collect crude directly from producing assets and pay separately for evacuation, transportation, handling and security.

"The smaller refineries couldn't take crude because of the issues we have outlined. The commercial terms were not realistic. And though receiving attention, these issues have not been resolved," Idoko said.

He added: "When the producers give modular refineries prices at Brent or WTI rates, they pay for freight and insurance while still bearing the cost of picking the product at the wellhead."

Idoko also said logistics charges are being counted twice under the current model and called for a domestic pricing structure that reflects actual point of delivery and strips out costs producers do not incur.

Dangote took nearly all domestic crude

The Nigerian Upstream Petroleum Regulatory Commission's second-quarter implementation report showed 53.7 million barrels of crude oil and condensate reached local refiners between April and June 2026. Out of 68.1 million barrels offered to domestic refiners, Dangote Petroleum Refinery received 98 per cent, accepting 52.6 million barrels, equal to 78 per cent of what was offered to it.

The NUPRC did not indicate any other refinery received crude supplies during the quarter. CORAN's response came after the regulator's report triggered questions about the state of modular refining capacity.

What needs to change

Idoko said the pricing model must account for the actual point of delivery and the full logistics burden carried by modular refineries. International benchmarks often embed cost assumptions that have no relation to how crude is physically moved within Nigeria, he explained.

What it means for the naira and consumers

With modular refineries idle, domestic refining capacity remains heavily concentrated in one plant. That reduces competition in the downstream sector and could prolong Nigeria's dependence on imported fuel, putting continued pressure on the naira and leaving consumers exposed to fuel price swings.