Regulator says 127 million barrels of crude and condensate went to domestic refineries in nine months, while September production averaged 1.717 million barrels per day.
LAGOS, Nigeria — The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has reaffirmed its commitment to enforcing the drill-or-drop policy as Nigeria pursues its target of producing three million barrels of oil per day, signalling continued pressure on oil and gas companies to develop their licences or relinquish them.
The commission also disclosed that Nigerian domestic refineries received more than 127 million barrels of crude oil and condensate between January and September 2026, reflecting progress in implementing the Domestic Crude Supply Obligation (DCSO).
NUPRC Chief Executive Oritsemeyiwa Eyesan announced the figures on Monday, October 26, at the 2026 OTL Africa Downstream Energy Week in Lagos. She was represented by Prosper Omonedo, assistant director of operations.
Speaking at the event, themed “Secure Energy, Shared Prosperity,” Eyesan said the commission was sustaining regulatory interventions to raise production, improve crude supply to domestic refiners and ensure that Nigeria’s pe d investments in exploration and development. By compelling licence holders to develop their assets or relinquish them in accordance with applicable requirements, the regulator aims to accelerate production and improve the utilisation of Nigeria’s upstream resources.
For Nigeria, the policy is central to efforts to increase oil output, strengthen export earnings, improve government revenue and provide sufficient feedstock for the country’s expanding domestic refining industry.
Domestic refineries receive 127 million barrels
Eyesan said crude deliveries to domestic refineries improved after the commission intervened in commercial disagreements between producers and refiners that disrupted supplies during the first quarter of 2026.
According to her, domestic refineries received 53.7 million barrels in the second quarter and 45.1 million barrels in the third quarter.
She put delivery performance for the two quarters at 97.4 per cent and 76.2 per cent, respectively.
“From Q1–Q3 of 2026, more than 127 million barrels of Nigerian crude went to Nigerian refineries,” she said.
The figures highlight the growing importance of domestic refining to Nigeria’s petroleum industry as the country seeks to process more crude locally rather than rely heavily on imported refined products.
However, the decline in reported delivery performance from the second to the third quarter suggests that sustaining crude supply remains a challenge, despite the improvement from the first-quarter disruptions.
Consistent feedstock availability is critical to refinery utilisation, production planning and the commercial viability of investments in domestic refining capacity.
For refiners, the volume of crude allocated is only one part of the equation. Timely delivery, suitable crude grades, pricing arrangements, transportation costs and the ability to settle transactions also determine whether allocated barrels can be processed economically.
NUPRC considers crude swap framework to cut costs
The commission is consulting crude producers, refiners and other industry stakeholders on a proposed domestic crude swap framework designed to reduce transportation costs and improve supply efficiency.
Under the proposed arrangement, a refinery could receive crude from the nearest suitable production or export point instead of transporting its allocated grade over longer distances.
Eyesan said the arrangement could reduce costs by an estimated $3–$4 per barrel.
If implemented effectively, the framework could improve refinery economics by reducing transportation expenses, shortening delivery distances and allowing crude allocations to be matched more efficiently with available infrastructure.
The potential savings could be significant for refiners processing large volumes. However, the actual benefit would depend on the crude grades available, transportation arrangements, the design of the swap mechanism and the commercial terms agreed by participants.
The proposed framework could also help reduce logistical friction between upstream producers and domestic refiners, although it would not eliminate the need for transparent pricing and reliable payment arrangements.
The commission’s intervention comes as Nigeria seeks to strengthen links between crude production and domestic refining, ensuring that increased upstream output translates into greater value addition within the country.
Nigeria’s oil production rises to 1.717 million bpd
Eyesan disclosed that Nigeria’s average crude oil and condensate production rose to 1.717 million barrels per day in September 2026, representing a 2.34 per cent increase from August.
Crude oil production alone averaged 1.53 million barrels per day, marking the fifth consecutive month in which the industry met or exceeded its production quota, according to the commission.
She attributed the improvement to better asset integrity, enhanced security around evacuation infrastructure, stronger collaboration with operators and sustained regulatory efforts to restore shut-in production.
The increase represents progress towards Nigeria’s ambition to raise output to three million barrels per day. Nevertheless, the target remains substantially above the September production level, underscoring the need for further investment, operational improvements and sustained production growth.
Higher production could strengthen export earnings and government revenues while improving the availability of crude for domestic refineries. It could also support the country’s foreign-exchange position, although the final fiscal benefit would depend on prices, production costs, contractual arrangements and the volume of crude available to the government.
The challenge for the regulator is to ensure that production gains are sustained rather than temporary, particularly given the operational, infrastructure and investment constraints that have affected Nigeria’s upstream sector.
2026 licensing round targets faster development
On the 2026 oil licensing round, Eyesan said the 40 blocks on offer would undergo a transparent evaluation process based on published criteria, with mandatory disclosure of beneficial ownership.
She said the commission was enforcing the drill-or-drop principle to discourage speculative licence holding and accelerate the development of petroleum resources.
According to her, 22 recent awardees were expected to contribute at least 250,000 barrels per day within five years.
The expected contribution would represent an important addition to national production if the awardees meet their development commitments. However, achieving that output will depend on exploration success, project financing, field development, infrastructure availability and the timing of production start-ups.
The licensing framework is therefore an important test of Nigeria’s ability to attract serious investors with the technical expertise and financial capacity to develop awarded assets.
Mandatory beneficial ownership disclosure could also improve transparency by helping authorities identify the individuals and entities ultimately controlling licence-holding companies.
For investors, predictable licensing procedures and consistent enforcement of development obligations are essential to maintaining confidence in the upstream investment environment.
Domestic crude supply remains critical to refining growth
Under Section 109 of the Petroleum Industry Act 2021, the NUPRC administers the domestic crude supply framework, including the allocation of crude to domestic refiners in line with the law.
The commission said it would continue working with the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to align refinery demand with crude supply planning.
It also reaffirmed its commitment to meeting the Domestic Gas Delivery Obligation, which is intended to support the availability of natural gas for domestic users.
The coordination between upstream production, crude allocation, refining and gas supply is central to Nigeria’s wider energy strategy.
More reliable crude deliveries could help domestic refineries improve operating schedules and reduce supply uncertainty. Improved gas availability could support electricity generation and industrial activity.
However, the effectiveness of these measures will ultimately depend on commercial implementation, including pricing, payment discipline, transportation infrastructure and the ability of refineries to operate sustainably.
For Nigeria, the broader objective is to ensure that growth in petroleum production translates into stronger domestic processing, industrial activity, employment and public revenue.
As the NUPRC maintains pressure on licence holders to develop their assets, the combination of higher production, transparent licensing and more efficient domestic crude supply will be critical to determining whether the country can move clo