Expert Warns: Weak Policy May Undercut Nigeria’s Energy Advantage
Nigeria at a Critical Energy Crossroads
NIGERIA may be on the verge of squandering a rare strategic advantage in the global energy market as policy failures and regulatory bottlenecks continue to limit the performance of the 650,000 barrels-per-day Dangote Petroleum Refinery, according to energy expert Abdulrazaq Hamzat.
Hamzat, Executive Director of the Foundation for Peace Professionals (PeacePro), warned in a statement that Nigeria’s inability to align policy, regulation, and crude supply could cost the country a once-in-a-generation opportunity created by structural changes in global refining.
Global Refining Capacity Shrinks
Citing data from energy intelligence firm Kpler, Hamzat noted that refinery closures across Europe and North America have permanently removed between 800,000 and 900,000 barrels per day of refining capacity. These shutdowns, driven by energy transition policies, aging infrastructure, and environmental regulations, have tightened global fuel markets.
As a result, the world is becoming increasingly reliant on large, late-cycle refineries such as Nigeria’s Dangote Refinery and Mexico’s Dos Bocas facility. These mega refineries, he said, now occupy a critical position in the global fuel supply chain.
“This is not a refinery problem; it is a policy problem,” Hamzat said. “Nigeria has built a world-class facility at a time when advanced economies are exiting refining. Yet policy inconsistencies are preventing it from shaping regional and global fuel markets.”
Underperformance Despite Capacity
Despite its scale and technical sophistication, the Dangote Refinery has operated at only about 60 to 65 per cent capacity. Hamzat attributed this largely to inconsistent crude oil deliveries by the Nigerian National Petroleum Company Limited (NNPCL).
Although the Federal Executive Council approved a naira-for-crude policy in 2024 to prioritise domestic refining and reduce foreign exchange pressure, implementation has remained weak. Hamzat said enforcement of the Domestic Crude Supply Obligation under the Petroleum Industry Act has been uneven, while the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has yet to publish verified data on crude volumes supplied to the refinery.
Regulatory and Technical Constraints
Hamzat also highlighted mechanical challenges at the refinery’s Residue Fluid Catalytic Cracking (RFCC) unit, a critical component for producing gasoline and other refined products. He noted that these technical issues have been worsened by fluctuating crude quality and regulatory uncertainty surrounding pricing, logistics, and export approvals overseen by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).
According to Kpler, the Dangote Refinery at full capacity could supply approximately 300,000 barrels per day of gasoline, 150,000 barrels per day of gasoil, and 140,000 barrels per day of jet fuel. These volumes could ease fuel shortages in the Atlantic Basin while significantly boosting Nigeria’s export earnings.
A Defining Moment Ahead
Kpler further observed that the ongoing corrective shutdown of the RFCC unit represents a pivotal moment. A successful restart could move the refinery from marginal participation to structural relevance in global fuel markets by mid-2026.
However, Hamzat warned that without urgent reforms, Nigeria risks remaining a fuel importer even as global markets tilt in favour of producers.
Urgent Steps for Government
To unlock the refinery’s full potential, Hamzat outlined several immediate actions. These include strict enforcement of the Domestic Crude Supply Obligation, the creation of an inter-agency task force involving NNPC, NUPRC, NMDPRA and Dangote management, and clearer regulatory guidance on pricing and exports.
He also called for transparent performance reporting, accelerated technical repairs with international support, and coordinated export strategies to boost foreign exchange earnings.
“The world has shifted,” Hamzat said. “If Nigeria fails to resolve its internal bottlenecks, this refinery will exist without influence, and the country will remain a fuel importer in a seller’s market.”
