Nigeria’s petroleum sector could be heading towards a new approach to moving crude oil and gas within the country, as the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) begins consultations on a domestic petroleum swap arrangement designed to reduce transportation costs and improve the availability of products.
The initiative is coming at a time when the country is working to strengthen domestic refining and ensure that locally produced crude reaches Nigerian refineries more efficiently. According to the NUPRC, the proposed arrangement would allow producers and domestic offtakers to meet supply obligations through a coordinated swap rather than physically moving crude across long distances.
The Commission Chief Executive, Oritsemeyiwa Eyesan, disclosed the development during a courtesy visit to the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) in Abuja on August 13, 2026. She said discussions with industry stakeholders were ongoing and that the modalities for the arrangement were still being developed.
The proposed petroleum swap is essentially about making the country’s crude and gas supply system more efficient.
Under the arrangement being considered, a producer with an obligation to supply crude may be located close to an export facility, while another producer may have its own obligation and be located closer to a domestic refinery or other local offtaker.
Rather than moving crude from one end of the country to another simply to satisfy individual supply obligations, the parties could agree to exchange or “swap” their obligations. The volumes would then be reconciled through a mechanism for netting off the respective transactions.
Explaining the concept, Eyesan said a producer close to an export facility could effectively meet its obligation through another producer whose facility is closer to a domestic offtaker. This could reduce unnecessary movement and make the domestic supply chain more efficient.
The idea could become particularly important as Nigeria seeks to increase the volume of locally produced crude available to domestic refineries while reducing inefficiencies associated with transporting crude over long distances.
Domestic Crude Supply Has Improved
The proposed swap comes against the backdrop of a significant improvement in crude oil deliveries to Nigerian refineries.
Latest statistics cited by the NUPRC show that local refiners received 53.7 million barrels of crude oil between April and June 2026, representing an overall performance of 97.4 per cent for the second quarter of the year.
The figure indicates substantial progress in compliance with the country’s Domestic Crude Supply Obligation (DCSO).
However, the NUPRC noted that crude oil importation is still continuing. That means increased domestic supply has not completely eliminated the need for imported crude, creating an additional reason for regulators and industry players to examine how locally produced resources can be distributed more efficiently.
The Bigger Goal: Strengthening Domestic Refining
At the centre of the proposal is the effort to ensure that Nigerian crude supports domestic refining capacity.
Nigeria has invested heavily in developing local refining capacity, making reliable access to crude an important part of the industry’s transition. A refinery can only operate consistently when it has adequate feedstock, and the distance between crude-producing assets and refineries can influence transportation costs and supply efficiency.
A petroleum swap could therefore provide another mechanism for connecting crude producers with domestic refiners.
Instead of requiring every producer to physically deliver crude to a specific destination, a coordinated system could allow nearby producers and offtakers to match their respective locations and obligations.
The proposed arrangement would also be linked to the Domestic Gas Supply Obligation, with coordination involving the Gas Aggregation Company Nigeria Limited (GACN).
Crude Oil Swap Still at an Early Stage
Despite the potential benefits, the NUPRC has made it clear that the crude oil component of the proposal is still at an early stage.
Eyesan said the Commission is consulting widely with stakeholders before the modalities are finalised. This suggests that issues surrounding volumes, pricing, contractual arrangements, logistics and the reconciliation of obligations will need to be addressed before the system can become operational.
The success of any swap arrangement will ultimately depend on whether producers, refiners and other participants can agree on a framework that is transparent and commercially workable.
It will also require effective coordination between the upstream and downstream regulatory authorities.
NMDPRA Backs Stronger Domestic Supply
The NMDPRA expressed support for efforts to strengthen domestic crude supply.
Its Chief Executive, Rabiu Abdullahi Umar, commended the NUPRC for improvements in enforcing domestic crude supply to local refiners. He also noted that the Petroleum Industry Act provides for transactions to take place on a willing-buyer, willing-seller basis, while pointing out that pricing remains a major factor in the sector.
His comments highlight one of the central issues that could determine the success of the proposed swap system.
Making crude available domestically is one challenge. Ensuring that the transactions take place at commercially acceptable prices is another.
If producers and refiners cannot agree on pricing and other commercial terms, the physical availability of crude alone may not be enough to guarantee sustainable domestic supply.
Strategic Reserves Could Strengthen Energy Security
The NMDPRA also expressed support for the creation of strategic petroleum reserves.
According to the Authority, such reserves could help strengthen Nigeria’s energy security and contribute to price stability.
The proposal adds another layer to the country’s broader effort to make the petroleum supply system more resilient.
While the petroleum swap would focus on improving the movement and allocation of crude and gas, strategic reserves could provide an additional buffer during periods of supply disruption or market volatility.
Together, the measures could help create a more coordinated domestic petroleum supply framework.
Can the Petroleum Swap Change Nigeria’s Supply Chain?
The proposed petroleum swap in Nigeria is still being developed, so its eventual impact remains to be seen.
However, the concept addresses a practical problem in the country’s petroleum industry: crude is produced in different locations, while refineries and domestic offtakers are located elsewhere. Moving every barrel according to individual supply obligations can create additional logistical costs and inefficiencies.
A swap mechanism could allow the industry to look beyond physical ownership and focus more on efficient matching of supply obligations with nearby demand.
If properly designed, it could reduce unnecessary transportation, improve crude availability for domestic refiners and strengthen compliance with domestic supply obligations.
But the success of the system will depend on transparent rules, commercially viable pricing, effective coordination and strong regulatory oversight.
A New Test for Nigeria’s Domestic Petroleum Policy
Nigeria’s petroleum industry is entering a period in which domestic supply is becoming increasingly important.
The NUPRC’s latest figures show that crude deliveries to local refiners have already improved significantly, but continued crude imports demonstrate that challenges remain.
The proposed swap arrangement could become another tool for addressing those challenges.
For now, the Commission is still consulting stakeholders and refining the details of the system. The crude oil component remains at an early stage, meaning there is still work to be done before the proposal can be translated into an operational framework.
What happens next could determine whether the idea becomes a practical solution for Nigeria’s domestic petroleum supply chain or remains another proposal within the industry’s long-running reform process.
The objective, however, is clear: move petroleum more efficiently, strengthen domestic supply and ensure that more of Nigeria’s crude resources support the country’s own energy needs.
