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The Crude Oil Refiners Association of Nigeria says forward crude sales could improve feedstock security but insists that all domestic refiners must have access to the arrangement.
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The association questions the proposed N1,350-per-litre ex-gantry ceiling, demanding clarity on who would bear costs above the limit and how any shortfall would be recovered.
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Petrol prices in Abuja have risen to about N1,410 per litre, while limited crude availability poses a challenge to the government’s proposed supply framework.
October 12, (THEWILL) – The Crude Oil Refiners Association of Nigeria has backed the Federal Government’s plan to sell crude oil to domestic refineries through forward contracts but warned that a proposed petrol price ceiling could reintroduce price regulation or subsidy obligations if the government fails to explain how excess costs will be covered.
The association said forward crude sales could provide greater certainty for refiners, reduce their exposure to international price volatility and improve feedstock planning.
However, it called for a transparent, commercially sustainable framework that accommodates both large and modular refineries.
The position comes amid rising petrol prices, with filling stations in Abuja selling Premium Motor Spirit at about N1,410 per litre, above the government’s proposed N1,350-per-litre ceiling on ex-gantry or landing costs.
Refiners Question Price-Cap Mechanism
CORAN spokesperson Eche Idoko, speaking with our correspondent on Sunday, said forward crude sales were workable in principle but stressed that the government must clarify crude availability, pricing arrangements and the treatment of 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 also questioned whether major industry groups, including the Oil Producers Trade Section and the Independent Petroleum Producers Group, had endorsed the proposed framework.
“Have OPTS and IPPG bought into this arrangement? Who will administer it, and under what commercial terms?” he asked.
Idoko said the government should ensure that smaller operators were not disadvantaged in favour of larger refineries.
“I have consistently advocated affordable crude access for all domestic refineries, including modular refineries, not just the big operators.
“Any framework must be inclusive, commercially sustainable and properly coordinated by NUPRC and NMDPRA,” he said, referring to the Nigerian Upstream Petroleum Regulatory Commission and the Nigerian Midstream and Downstream Petroleum Regulatory Authority.
On the proposed N1,350-per-litre ex-gantry ceiling, he questioned how the figure was determined and who would absorb any difference between the prescribed limit and actual production or supply costs.
“While price stability is desirable, we must be careful not to reintroduce price regulation or subsidy through the back door,” he said.
He argued that improving crude production, securing feedstock for local refineries and reducing refining costs would provide a more sustainable response to rising petrol prices than administratively determining product prices.
Crude Availability Remains a Major Challenge
Taiwo Oyedele, Minister of Finance. Photo Credit: proshareThe proposed forward-sale arrangement faces a significant supply challenge, given the competing claims on Nigeria’s crude production.
Finance Minister and Coordinating Minister of the Economy Taiwo Oyedele recently said Nigeria’s crude oil production of about 1.8 million barrels per day did not translate into an equivalent volume available to the Federal Government for domestic allocation.
Production-sharing contracts, joint-venture arrangements, production costs and royalties reduce the volume available to the government.
“The reality is that today we do not have up to 700,000 free crude to give anyone, including Dangote,” Oyedele said during an interview on Channels Television’s Politics Today.
The minister’s explanation highlights the difficulty of guaranteeing feedstock to local refiners while honouring existing contractual obligations and meeting other commitments.
Under the proposed forward-sale arrangement, the government would need to establish the volume of crude available for domestic refineries, the pricing formula and the mechanism for allocating supplies among eligible operators.
Oyedele said forward sales, as production increases and previously committed crude becomes available, could help shield domestic fuel prices from international market volatility.
Industry Stakeholders Welcome Intervention
Chief Executive Officer of Petroleumprice.ng, Jeremiah Olatide, welcomed the proposed forward sales, describing the initiative as a positive response to industry concerns about rising crude prices and their effect on domestic fuel costs.
“I am happy that the Federal Government has decided to listen to experts’ advice that there must be a form of intervention through crude supply to the refineries. These forward sales to local refineries are a good move,” Olatide said.
He said the arrangement could ease pressure on refiners and strengthen their bargaining position when negotiating feedstock prices.
“It is definitely going to help and ease the pressure on refineries and, with that, I think better negotiation, better price,” he said.
However, the benefits would depend on the quantity of crude supplied, the terms of the contracts and whether the resulting savings translated into lower wholesale and retail prices.
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Petrol Prices Rise Across Abuja
The debate over crude supply and price limits comes as petrol retailers in Abuja have increased pump prices.
A market survey by our correspondent on Sunday showed that MRS outlets raised their petrol price by N39 per litre to N1,409 from N1,370 over the weekend.
The new price was recorded at MRS stations in Kubwa, Katampe, Gwarinpa and other parts of the Federal Capital Territory.
Ranoil and AA Rano increased their prices by N10 per litre to N1,410 from N1,400, while Nipco also sold petrol at N1,410 per litre.
The proposed N1,350 ceiling, however, relates to ex-gantry or landing costs, rather than necessarily representing the final pump price. Retail prices also reflect distribution expenses and retail margins.
The government’s proposal is intended to cushion consumers against sharp changes in global crude prices and exchange rates.
Under the reported price-modulation arrangement, refiners and importers would initially absorb costs above the ceiling and recover the shortfall when market conditions improve.
But without clear rules on how such shortfalls would be calculated, financed and recovered, the arrangement could create uncertainty for refiners and importers.
The key test for the government will be whether it can secure sufficient crude supplies, maintain commercially viable terms for domestic refiners and establish a transparent pricing framework without shifting unplanned costs to businesses or public finances.
Ogochukwu Onwaeze is a writer specializing in business and economic journalism. At THEWILL News Media, she translates market trends, financial developments, and policy shifts into clear and engaging stories.
