Nigeria's refineries could save $329m from proposed crude swap

Nigeria's upstream petroleum regulatory commission is exploring a domestic crude oil and gas swap arrangement to cut supply costs for local refineries. The initiative, currently in consultation with industry stakeholders, could save refineries between $246.6 million and $328.8 million in the first half of 2026.

This proposed swap is designed to strengthen compliance with domestic supply obligations and reduce the need for long-distance crude transportation. Savings are projected based on an estimated 82.2 million barrels of crude supplied to domestic refineries and an anticipated $3-$4 per barrel reduction in logistics and acquisition costs.

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Yes, the crude swap will save around $3-$4 per barrel.

Industry representatives highlight the significant logistical expenses associated with current crude delivery methods. Eche Idoko, National Publicity Secretary of the Crude Oil Refiners Association of Nigeria, explained that trucking crude can add $3-$4 per barrel, and barging, as used by Dangote Refinery, can cost as much as $12 per barrel. The swap arrangement would eliminate these costs.

If implemented, the swap could offer substantial savings, translating to $246.6 million at a $3 per barrel saving and $328.8 million at a $4 per barrel saving on the projected 82.2 million barrels. These figures represent potential savings, as the swap framework was not operational during the January-June period for which the projections were made.

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The logistics costs of taking crude from afar are hovering between $3 and $4. If they are trucking it, it is between $3-$4 extra. So, the swap eliminates this. It would no longer apply. Sometimes, it is more, like $5. If you are doing barging like Dangote, it is as high as $12. A swap saves this amount in logistics.