CORAN Backs Forward Crude Sales to Local Refiners, Rejects FG's N1,350 Petrol Ceiling

The Crude Oil Refiners Association of Nigeria (CORAN) has backed the Federal Government's plan to sell crude oil to local refineries through forward contracts, but kicked against the proposed N1,350 per litre petrol price ceiling, warning it could pile up losses without a clear recovery mechanism.

Petrol prices in Abuja have already risen to about N1,410 per litre, above the proposed N1,350 per litre ceiling on ex-gantry or landing costs.

Forward Sales Workable in Principle

CORAN said forward sales could give refiners more predictable crude supplies and cut their exposure to fluctuations in international oil prices. The association, however, insisted the policy must be transparent, commercially viable and open to all domestic refiners.

Speaking on Sunday, CORAN spokesperson Eche Idoko said forward contracts could work only if the government addresses crude availability, pricing and existing contractual commitments.

"The proposed forward sale of crude to domestic refineries is workable in principle and could provide feedstock certainty and reduce price volatility. However, the critical questions are availability, pricing, transparency and the protection of existing contractual obligations," Idoko said.

He asked whether key industry groups, including the Oil Producers Trade Section (OPTS) and the Independent Petroleum Producers Group (IPPG), backed the proposal. He also asked who would oversee the arrangement and set its commercial terms.

Idoko warned that the framework must not concentrate benefits among large operators while locking out smaller players. All domestic refineries, including modular plants, should have access to affordable crude oil under a commercially sustainable arrangement, he said. He called for proper coordination by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).

Concerns Over the N1,350 Ceiling

Last week, Finance Minister and Coordinating Minister of the Economy Taiwo Oyedele confirmed the government was negotiating the ceiling under a price-modulation arrangement aimed at shielding consumers from sharp swings in global crude prices and foreign exchange rates. Under the proposal, refiners and importers would absorb costs above the ceiling and recover the shortfall when market conditions improve.

Idoko is not convinced. He questioned how the N1,350 figure was arrived at and who carries the burden when production costs exceed the limit.

"On the proposed N1,350 ex-gantry price ceiling, I have serious reservations. How was that figure determined? Who bears the difference when production costs exceed the ceiling, and how will the shortfall be recovered?" he asked.

Without a clear answer on how the gap would be recovered, he warned the policy could quietly reintroduce price controls or an indirect subsidy.

What It Means for the Market

CORAN's position points to the difficulty of capping pump prices while asking refiners and marketers to run on commercial terms. Idoko argued that government attention should go to raising crude oil production, improving feedstock availability and cutting refining costs rather than relying on administrative price limits.

For Nigerian businesses and consumers, the standoff matters because crude supply certainty and refining costs feed directly into what marketers pay at the gantry, and ultimately what motorists pay at the pump.