IPPG Chairman Adegbite Falade says Nigeria’s growing refining capacity must be matched by increased upstream production, secure crude evacuation infrastructure and a transparent domestic crude market.
Nigeria’s rapidly expanding refining capacity could face a major crude supply challenge unless the country accelerates upstream production, strengthens evacuation infrastructure and develops a more transparent domestic crude market, Chairman of the Independent Petroleum Producers Group (IPPG), Adegbite Falade, has warned.
Falade, who is the Ceo of Aradel Holdings Plc, made the submission while delivering the opening keynote address at the third Nigeria Oil Refining Summit (NORS 2026) in Lagos, today on September 28, 2026, where he argued that the future of Nigeria’s refining industry would depend as much on the strength of the upstream sector as on the capacity of refineries themselves.
Speaking on the summit theme, “Refining for Value: Linking Upstream Supply to Downstream Demand,” the IPPG chairman said Nigeria now faces a different challenge from the one that dominated discussions around the country’s petroleum sector for decades: ensuring that its growing domestic refining capacity can be consistently supplied with locally produced crude.
“Geologically, yes. Technically, yes. Commercially and logistically, not yet there,” Falade said when addressing the question of whether Nigeria can reliably feed its refineries.
According to him, Nigeria can meet the crude requirements of its refineries if the country increases production, protects evacuation infrastructure, aligns crude grades with refinery configurations and establishes a competitive and transparent domestic crude market.
Refinery demand could approach 1.5 million barrels per day
Falade said domestic refineries could require more than 1.5 million barrels of crude oil per day in the medium term, depending on refinery rehabilitation, expansion, operating rates and the commissioning of additional modular facilities.
That potential requirement is significant when compared with Nigeria’s current production levels.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) reported that Nigeria produced an average of 1.677 million barrels per day of crude oil and condensate in August 2026, comprising about 1.50 million barrels per day of crude oil and the balance in condensates.
Falade said the narrow gap between potential domestic refinery demand and national production leaves limited room for exports and other existing crude commitments.
He identified government revenue requirements, joint-venture partner offtake, crude-backed financing arrangements, production outages, OPEC commitments, crude-grade differences and disruptions to pipelines and terminals among the competing demands on Nigeria’s available crude.
“This is why the upstream industry must be placed at the centre of the refining conversation,” he said.
Nigeria has the reserves, but must convert them into production
Falade noted that the fundamental challenge was not the absence of hydrocarbon resources.
The NUPRC’s official reserves position as of January 1, 2026, puts Nigeria’s combined crude oil and condensate reserves at 37.01 billion barrels, while total gas reserves stood at 215.19 trillion cubic feet (TCF).
For Falade, the critical issue is converting those reserves into economically viable production and ultimately into reliable feedstock for domestic refineries.
“That conversion requires capital. It requires fiscal stability. It requires security. It requires infrastructure. It requires regulatory certainty. It requires bankable commercial terms,” he said.
He stressed that the upstream and downstream sectors should not be treated as separate industries, arguing that they form a single petroleum value chain whose performance depends on the efficiency of each component.
DCSO compliance improves, but commercial issues remain
Falade also welcomed recent improvements in the implementation of the Domestic Crude Supply Obligation (DCSO) established under Section 109 of the Petroleum Industry Act.
NUPRC reported that domestic crude supply performance reached 97.4 per cent in the second quarter of 2026, with 53.7 million barrels of crude oil and condensate supplied to local refineries between April and June.
The Commission said the improvement coincided with increased domestic oil production and the signing of long-term crude supply agreements supported by bankable sales and purchase agreements between producers and domestic refiners.
Falade said the progress demonstrated that regulatory mechanisms could support domestic refining, but stressed that policy must ultimately translate into commercially workable transactions.
IPPG calls for four priorities
The IPPG chairman outlined four areas he said should receive immediate attention if Nigeria is to sustain its refining expansion.
- Increased oil production.
Falade argued that Nigeria cannot meet rising refinery demand by simply redistributing a limited volume of crude among domestic consumers.
“The answer to rising domestic refining demand is not merely to redistribute a limited pool of crude. The answer is to create more barrels,” he said.
He called for greater exploration, faster field development, marginal-field growth, improved access to capital and measures that would keep Nigeria competitive for upstream investment.
- Protection and modernisation of crude evacuation infrastructure.
While acknowledging progress in reducing crude theft and pipeline sabotage, Falade said security measures should be accompanied by investment in dedicated crude evacuation corridors, pipelines, storage facilities, terminals, jetties and marine logistics.
- Development of a genuine domestic crude market.
According to Falade, such a market should support the aggregation of volumes from multiple producers, crude-grade blending, transparent swaps, substitution among equivalent grades and efficient terminal delivery.
“A barrel is not simply a barrel,” he said, stressing that refineries need the appropriate crude grade, volume, quality, location, delivery schedule and commercial terms.
- To position Nigeria as a regional refining and petrochemical hub.
Falade said changes in global refining capacity, energy security and international petroleum trade presented an opportunity for Nigeria to strengthen its position within the African energy market.
He identified the country’s hydrocarbon resources, large domestic market, entrepreneurial capacity and geographic location as potential advantages, while cautioning that these would need to be supported by deliberate investment and policy implementation.
From refining capacity to integrated petroleum value
Falade said Nigeria was approaching a potentially significant turning point in its petroleum industry, with the possibility of simultaneously increasing crude production, expanding domestic refining and exporting refined petroleum products.
He particularly commended refinery operators for their role in changing the structure of Nigeria’s petroleum industry and singled out Aliko Dangote for the development of the Dangote refinery.
The 650,000-barrel-per-day facility has become a major component of Nigeria’s refining landscape. The refinery also launched a major public offering in September 2026 as part of plans linked to its expansion, with the company targeting increased processing capacity.
But Falade argued that refinery capacity alone would not guarantee a functioning domestic petroleum value chain.
He called for a shift from short-term allocation mechanisms towards rolling crude supply planning, bankable contracts, transparent market pricing, efficient logistics and increased production.
“The upstream industry stands ready to play its part,” Falade said, urging government, regulators, refiners, financiers and infrastructure operators to work towards a domestic crude market that is secure, transparent, competitive and investable.
“If we do that, Nigeria will not merely feed its refineries – Nigeria will build a fully integrated petroleum economy in which every barrel is directed to its highest national and commercial value,” he said.
Falade said this would ultimately determine whether Nigeria could successfully translate its refining expansion into broader economic value.
“That is how we refine for value. That is how we connect upstream supply to downstream demand. And that is how we convert policy into commercial reality,” he said.
