Nigeria’s oil sector in 2025 revealed deep structural contradictions, as the country increasingly relied on imported crude oil to sustain domestic refining, despite being one of the world’s major crude producers, raising fresh concerns about inefficiencies in the petroleum value chain and the impact of ongoing reforms.
Data from the National Bureau of Statistics Foreign Trade in Goods report indicates that crude oil, typically Nigeria’s leading export, became a major import commodity during the year due to persistent supply gaps affecting local refineries.
In the first quarter, crude imports were valued at N1.19tn, reflecting an urgent shift by refinery operators seeking alternative sources amid inadequate domestic supply. The figure rose by 37.8 per cent to N1.64tn in the second quarter and increased further by 46.5 per cent to N2.403tn in the third quarter, highlighting worsening supply challenges.
However, imports dropped sharply by 79.2 per cent to N499.75bn in the fourth quarter, suggesting a temporary improvement in supply or reduced demand, though the overall trend still pointed to an unstable supply environment throughout the year.
Monthly figures showed significant fluctuations, underlining the unpredictability of crude availability. Imports rose from N335.69bn in January to N445.27bn in February, before easing to N407.29bn in March. April recorded a slight drop to N335.31bn, followed by a sharp 116 per cent increase to N724.23bn in May, signalling severe supply disruptions.
June saw a decline to N582.94bn, but imports surged again in July to a peak of N1.28tn, the highest monthly figure recorded. This was followed by steady declines through August, September, and October, before dropping drastically to N92.67bn in November and falling to zero in December, indicating a brief stabilisation in supply conditions.
The pattern reflects a highly volatile system, where refineries are compelled to adjust sourcing strategies frequently, often resorting to international markets to remain operational.
Industry insights show that both modular and large-scale refineries have struggled to secure sufficient crude locally, forcing them to depend on imports. Many operators attribute this to systemic challenges in domestic allocation frameworks.
Stakeholders within the Crude Oil Refinery-owners Association of Nigeria confirmed that local refiners have faced limited access to crude, with some receiving little or no supply under existing arrangements such as the Domestic Crude Oil Supply Obligation.
They noted that the “willing buyer, willing seller” model has further complicated access, particularly for smaller refineries, many of which operate below capacity or shut down intermittently due to lack of feedstock.
Some facilities reportedly run at as little as 10 per cent of their installed capacity, not due to technical limitations but because of inadequate crude supply. Even larger refineries have encountered similar constraints.
The Dangote Petroleum Refinery, for instance, disclosed that it receives only a portion of its crude requirements from domestic sources under the naira-for-crude arrangement. While it gets about five cargoes monthly, this falls far short of the 13 cargoes needed, forcing it to source additional supplies from international markets.
The refinery also noted that locally supplied crude is priced at international rates, often with added premiums, limiting the intended benefits of the policy and sustaining dependence on foreign exchange for imports.
Further findings suggest that international oil companies prefer exporting crude due to more favourable pricing and fewer regulatory constraints, rather than supplying the domestic market under less predictable conditions.
Long-term export contracts, dollar-denominated transactions, and concerns about currency volatility have further reduced the volume of crude available for local refining.
The Federal Government’s naira-for-crude policy, introduced in October 2024 to ease access for domestic refineries and reduce pressure on foreign exchange, has yet to achieve its primary objectives, according to 2025 data.
Analysts attribute this to structural challenges, including mismatches between supply allocations and refinery needs, pricing disagreements, and existing export commitments that limit domestic availability.
The data also shows that Nigeria sourced imported crude from countries such as Algeria, Angola, and the United States, reflecting a growing reliance on global markets where supply reliability takes precedence.
Energy experts have criticised the policy’s implementation, noting that it has not significantly improved crude supply to local refineries or reduced fuel prices.
They argue that continued reliance on international pricing benchmarks means that even locally refined products remain tied to global price dynamics, limiting any meaningful price relief for consumers.
Some analysts suggest that targeted interventions, such as subsidising crude supply to refineries or restructuring supply frameworks, may be necessary to stabilise prices and improve efficiency.
Experts also point to deeper issues within the upstream sector, including years of underinvestment, legacy debt obligations tied to forward crude sales, and insufficient production levels to meet both export and domestic demands.
They warn that even with increased refining capacity, Nigeria may struggle to supply enough crude to fully utilise its facilities, raising concerns about long-term sustainability.
Additionally, modern refineries often require a mix of crude grades, meaning that some level of importation is inevitable, further complicating the path to self-sufficiency.
Looking ahead, analysts expect crude imports to persist into 2026, driven by ongoing challenges such as pipeline vandalism, oil theft, logistical bottlenecks, and delays in developing new oil fields.
As long as crude exports remain a primary source of foreign exchange, domestic refineries may continue to depend on international markets for feedstock.
While recent investments in refining infrastructure were expected to reduce reliance on imports of refined products, the current reality suggests a more complex transition.
Ultimately, bridging the gap between upstream production and downstream demand remains essential. Without a coordinated approach that addresses supply constraints and policy inefficiencies, Nigeria’s goal of achieving energy independence may remain out of reach.
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