Nigeria eyes $3 savings per barrel through domestic crude swap plan

Nigeria is weighing a crude swap framework that would let refiners take oil from the nearest suitable source, a change it estimates could cut about $3 to $4 from the cost of each barrel.

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) is consulting producers, refiners and other stakeholders on the plan, according to sideline conversation at the OTL Africa Downstream Energy Week in Lagos.

Under the proposal, a refiner would receive crude from the closest suitable production or export point rather than moving its allocated grade over long distances.

The regulator did not say when the framework might take effect or what it would require of producers and refiners. It also did not say who would bear the cost of arranging the swaps.

Prosper Omonedo, an assistant director for operations at the commission, represented  Oritsemeyiwa Eyesan, NUPRC’s chief executive, at the event.

The swap discussion follows a recovery in deliveries under the Domestic Crude Supply Obligation, the rule that requires crude to be directed to local refineries before it is exported. Under Section 109 of the Petroleum Industry Act 2021, the commission allocates oil to domestic plants ahead of foreign sales.

Local refineries received more than 127 million barrels of crude and condensate from January through September,  Omonedo   aid.

Supplies in the first quarter were hurt by commercial disagreements between producers and refiners, according to the speech. The commission stepped in to mediate.

Refineries received 53.7 million barrels in the second quarter and 45.1 million in the third, which the regulator put at 97.4 percent and 76.2 percent of the volumes allocated. By subtraction, that implies roughly 28 million barrels in the first quarter.

“We engaged producers and refiners,” the speech said, crediting the talks for the better performance in the second and third quarters.

The drop in third-quarter compliance to 76.2 percent from 97.4 percent shows deliveries remain uneven. The regulator did not explain the decline.

Nigeria produced an average of 1.717 million barrels a day of crude and condensate in September, up 2.34 percent from August, the commission said. Crude alone averaged 1.53 million barrels a day. That was the fifth straight month in which the industry met or exceeded its quota, according to the regulator.

Omonedo pointed to better asset integrity, tighter security around evacuation infrastructure, closer cooperation with operators and continued efforts to bring shut-in output back online. Crude theft and pipeline damage have long weighed on production in Africa’s largest oil-producing nation.

The regulator also addressed the 2026 Licensing Round, in which 40 blocks are on offer. Bids will go through an evaluation with published criteria, and bidders will have to disclose their beneficial owners, the speech said.

The commission is also enforcing a drill-or-drop principle intended to discourage companies from sitting on licenses without developing them. It expects 22 recent awardees to contribute at least 250,000 barrels a day within five years.

The regulator said it remains committed to the Domestic Gas Delivery Obligation, which is meant to channel gas to local users. It also plans to work with the Nigerian Midstream and Downstream Petroleum Regulatory Authority to line up refinery demand with crude supply planning. The aim, according to the speech, is for gains in upstream output to reach households, industry and power generation.

A swap framework could ease logistics for refiners far from their assigned fields, and saving $3 to $4 a barrel would be material for plants running on thin margins. But the plan is at the consultation stage, and its value will depend on how grades are matched, how pricing differences between crude streams are settled, and whether producers agree to the terms.