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NORS 2026: Nigeria must raise oil output to sustain refining boom, says Falade – EnviroNews
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The Chairman of the Independent Petroleum Producers Group (IPPG), Adegbite Falade, has warned that Nigeria’s emerging refining capacity could face crude supply constraints unless the country urgently increases oil production and strengthens the infrastructure and commercial framework for domestic crude supply.
Falade, who is also the Chief Executive Officer of Aradel Holdings, spoke on Monday, September 28, in Lagos while delivering the opening keynote address at the third Nigeria Oil Refining Summit (NORS 2026), organised by the Crude Oil Refinery Owners Association of Nigeria (CORAN).
The summit, themed “Refining for Value: Linking Upstream Supply to Downstream Demand,” brought together policymakers, regulators, refiners, producers, investors and other stakeholders in the petroleum industry.
According to Falade, Nigeria’s ability to sustain its growing refining capacity would depend fundamentally on the strength and competitiveness of the upstream sector, which must provide the crude feedstock required by domestic refineries.
He said the country could reliably supply its refineries with crude, but only if it increased production, protected evacuation infrastructure, matched crude grades with refinery configurations and developed a competitive and transparent domestic crude market.
“Geologically, yes. Technically, yes. Commercially and logistically, not yet there and certainly not by regulation alone,” Falade said in response to the question of whether Nigeria could reliably feed its refineries.
“Simply put, Nigeria can reliably feed its refineries if we increase production, protect evacuation infrastructure, match crude grades to refinery configurations and create a domestic crude market in which commercial terms are competitive, transparent and investable.”
Refinery demand could exceed 1.5m bpd
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 refineries.
He noted that such demand would place significant pressure on Nigeria’s current production base.
According to him, Nigeria’s liquids production stood at about 1.68 million barrels per day as of August 2026, based on the Nigerian Upstream Petroleum Regulatory Commission’s monthly production report.
He warned that if refinery demand rose towards 1.5 million barrels per day while production remained around 1.6 million barrels per day, the country would have little room to accommodate export commitments, government revenue requirements, crude-backed financing, joint-venture partner offtake, production outages, OPEC commitments, crude-grade mismatches and disruptions to pipelines and terminals.
“This is why the upstream industry must be placed at the centre of the refining conversation,” he said.
Falade stressed that Nigeria’s challenge was not a lack of hydrocarbon resources, citing NUPRC’s published reserves position as of January 1, 2026, which put the country’s crude oil and condensate reserves at approximately 37.01 billion barrels, while natural gas reserves stood at about 215.19 trillion cubic feet.
“The challenge, therefore, is not whether the hydrocarbons exist underground. It is whether we can convert reserves into production, production into secure supply, and secure supply into domestic refining competitiveness,” he said.
Production growth critical
The IPPG chairman said converting Nigeria’s reserves into increased production would require capital, fiscal stability, improved security, infrastructure, regulatory certainty and bankable commercial terms.
He stressed that upstream and downstream operations should no longer be treated as separate industries, but as interconnected components of a single petroleum value chain.
Falade also commended regulators, producers and refiners for progress in implementing the Domestic Crude Supply Obligation (DCSO) framework established under Section 109 of the Petroleum Industry Act.
He cited recent NUPRC figures showing DCSO compliance rising to approximately 97.4 per cent in the second quarter of 2026, from about 41 per cent in the first quarter.
He said the development had reinforced the growing role of indigenous producers, noting that IPPG represents 34 indigenous exploration and production companies which, according to him, now account for more than half of Nigeria’s total oil and gas production.
“The feedstock required to power Nigeria’s refining sector will increasingly flow from our fields and terminals,” Falade said.
Four priorities for sustainable refining
To ensure a reliable supply of crude to domestic refineries, Falade outlined four priorities for government and industry stakeholders.
The first, he said, was to grow Nigeria’s production base.
“Nigeria cannot refine barrels that are not produced,” he said, arguing that the solution to rising refinery demand was not simply to redistribute a limited pool of crude, but to create additional production.
He called for greater incentives for exploration, faster development activity, support for marginal field growth, improved access to capital and measures to ensure Nigeria remains competitive for upstream investment.
The second priority, according to Falade, was the protection and modernisation of crude evacuation infrastructure.
While acknowledging progress in reducing crude theft and pipeline sabotage, he said Nigeria needed dedicated crude evacuation corridors, secure pipelines, adequate terminal capacity, sufficient storage, functional jetties and efficient marine logistics.
His third priority was the development of a genuine domestic crude market capable of aggregating volumes from multiple producers, supporting grade blending, facilitating transparent swaps and substitutions and enabling efficient terminal delivery.
“A barrel is not simply a barrel,” he said, explaining that refineries require the appropriate crude grade, volume and quality, delivered to the right location and at the right time under commercially viable terms.
The fourth priority was for Nigeria to position itself as a regional and global refining and petrochemical hub.
Falade said changing global refining patterns, energy security concerns and shifts in international trade flows had created an opportunity for Nigeria to establish itself as a major African energy hub.
“We have the resource base, market size, entrepreneurial capacity and geographic advantage to become a major African energy hub. But we must act deliberately and urgently,” he said.
From policy to commercial reality
Falade said Nigeria was now at a potentially historic point where it could simultaneously become a major crude producer, competitive refining centre and net exporter of refined petroleum products.
However, he cautioned that installed refinery capacity alone would not deliver that outcome.
“It will be delivered by producing wells, secure infrastructure, functioning markets, bankable agreements, transparent regulation and mutual accountability,” he said.
He urged stakeholders to move away from annual crude allocation exercises towards rolling supply planning, from mandates to bankable contracts, and from capacity announcements to verified throughput.
He also called for transparent market pricing, aggregation and optimisation of logistics, as well as a shift from managing crude scarcity to growing production.
“The upstream industry stands ready to play its part,” Falade said, urging the government, regulators, refiners, financiers and infrastructure operators to work together to establish a domestic crude market that is secure, transparent, competitive and investible.
“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.
“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.”
