The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, has said Nigeria’s estimated daily crude oil production of 1.8 million barrels, including condensate, cannot be treated as oil entirely available to the Federal Government for domestic refining or other uses, arguing that production costs, contractual obligations and revenue-sharing arrangements determine the volume the government can control.
Oyedele made the remarks during an appearance on Channels Television, amid renewed controversy over the pricing of crude oil supplied to domestic refineries, the cost of locally refined petrol and the Federal Government’s position on the use of Nigerian crude for domestic petroleum production.
The minister maintained that although crude oil is extracted from Nigerian territory, the government cannot assume that the entire volume produced belongs to it or that all the crude can be supplied to local refiners at prices below prevailing international market rates.
“Just because the crude is under our soil, under our feet, does not mean that all of it is available for you to give to anyone,” Oyedele said.
He explained that crude oil production involves several financial and contractual components, including exploration and production costs, the entitlements of international oil companies, royalties payable to the government and the distribution of profits under existing arrangements.
According to him, these obligations must be accounted for before determining the quantity of crude oil and revenue available to the government.
“That was why I made the analysis of, when you bring out a barrel of crude oil, it has so many components. There’s a cost of producing it. It is not free,” he said.
Oyedele added that international oil companies operating in Nigeria have contractual entitlements and cannot be expected to produce crude oil without recovering their costs and receiving their agreed returns.
“There is the one about the portion of the international oil company that is doing it. They are not here to just come and do charity for Nigeria. These are contractual arrangements. There’s a portion of royalty. There is a portion of the profit from oil,” he said.
The minister’s comments come amid growing debate over whether locally produced crude should be supplied to domestic refineries at discounted rates to reduce production costs and make petrol more affordable for consumers.
The controversy has particularly focused on the relationship between the Federal Government’s crude oil supply arrangements and domestic refining operations, including the Dangote Refinery, which requires substantial volumes of crude oil to produce petrol and other petroleum products.
Oyedele argued that Nigeria’s daily production figure should not be confused with the quantity of crude the government can freely allocate to domestic refiners.
He said the government must also consider the revenue it would forfeit if crude oil were sold to local refineries below prevailing market prices.
“At the end of the day, the fact that you have 1.8 million barrels plus condensate a day does not mean that all of it is available for you to give to anyone,” he said.
“Whatever you have left, if you give that crude at lower than market price, you lose the revenue that’s supposed to go to the treasury.”
He warned that reducing the value of crude supplied to domestic refiners could affect government revenue and its capacity to meet financial obligations, including the payment of workers’ salaries.
“That’s when you start defaulting and paying salaries,” Oyedele said.
The minister’s position places the emphasis on the government’s responsibility to protect oil revenue, even as the country seeks to expand domestic refining capacity and reduce its dependence on imported petroleum products.
However, the debate also raises questions about how the government balances revenue generation with the potential benefits of ensuring that domestic refineries have access to locally produced crude at prices that support affordable fuel production.
Oyedele also rejected arguments that Nigeria could restore fuel subsidies while eliminating the corruption and diversion associated with the previous subsidy regime.
He recalled that Nigeria’s petrol consumption was once estimated at nearly 90 million litres daily, questioning whether the entire volume was genuinely consumed within the country.
“There was a time when our consumption was close to 90 million litres a day. You think it was all consumed in Nigeria?” he asked.
The minister linked the former subsidy system to the diversion of petroleum products across Nigeria’s borders, arguing that subsidised fuel could be transported to neighbouring countries where it could command higher prices.
He cited protests in neighbouring Cameroon following Nigeria’s removal of the petrol subsidy as an indication that the policy’s effects extended beyond Nigerian consumers.
“When Mr. President removed the subsidy, they were protesting in, I think it was Cameroon,” Oyedele said.
He further argued that preventing the cross-border diversion of subsidised fuel would remain difficult, noting that even countries with significant security resources struggle to achieve complete border control.
“America is the most powerful country in the world. They haven’t been able to secure their border 100%,” he said.
Oyedele also challenged proposals to reintroduce fuel subsidies on the promise that corruption associated with the scheme would first be eliminated.
“If anybody says to you, some of them say we will fight the corruption and then we will bring back the subsidy, I say, with what Mr. President has done, he has removed the corruption,” he said.
“So would you bring the corruption back so that you can fight it, remove it, and then bring up subsidy? It is not adding up.”
His remarks reflect the Federal Government’s position that the removal of the petrol subsidy was intended to eliminate the financial burden and market distortions associated with the previous system.
However, the policy remains a subject of public debate, particularly over the impact of higher fuel prices on transportation, food costs, businesses and household incomes.
The minister was also questioned about the government’s calculations behind a ₦1,350-per-litre benchmark announced in connection with petrol pricing, including the figures used to determine the cost of crude oil and the estimated cost of refining.
In responding, Oyedele maintained that crude oil remains the primary input in petrol production and must be assigned a cost, irrespective of whether it is produced locally or imported.
“To refine, when you see petrol, the major component that goes into it is crude, crude oil. That crude oil, you have to buy it,” he said.
He argued that the international crude oil market influences the cost of feedstock used by refineries and, consequently, the prices of refined petroleum products.
According to him, changes in global crude oil prices, including those triggered by developments in the Middle East and disruptions to international supply chains, can increase the cost of crude available to refiners.
Oyedele cited the Dangote Refinery as an example, saying the facility must procure crude at the price available to it.
“Dangote will take whatever he’s able to get at whatever price,” he said.
Beyond the cost of crude, the minister identified freight, insurance and financing as additional expenses that contribute to the final price of refined petroleum products.
He said shipping costs had risen because of constraints in the availability of vessels, while insurance premiums and borrowing costs had also increased.
“Freight has gone up because the number of vessels available around the world is constrained,” he said.
“Insurance has gone up. The financing cost is there. Before you bring the crude here, before you refine it, you pay a 30% interest rate. You have to factor it in.”
The minister’s explanation, however, was challenged during the discussion, particularly over whether the cost of Nigerian crude supplied to domestic refineries should be determined primarily by international market prices or through a pricing framework that recognises the country’s interest in developing local refining.
The argument centres on whether Nigeria should simply apply international commercial benchmarks to crude produced within its borders or establish terms that give domestic refiners a cost advantage while supporting the broader economy.
Those questioning the government’s approach argue that the availability of locally produced crude should be a central consideration in determining the cost of feedstock for Nigerian refineries, particularly as the country seeks to reduce its dependence on imported fuel.
The government, as explained by Oyedele, maintains that crude oil has an economic value that cannot be ignored and that selling it below market prices could reduce the revenue available to the treasury.
The disagreement highlights the competing policy objectives facing Nigeria’s petroleum sector: maximising public revenue from crude oil exports, ensuring a reliable supply of feedstock to domestic refineries, encouraging investment in local refining and preventing another round of fuel subsidies and associated market distortions.
Nigeria has increasingly focused on expanding domestic refining as a strategy to reduce its reliance on imported petrol and limit exposure to international supply disruptions. However, the extent to which locally produced crude should be sold to domestic refiners at international market prices remains a contentious issue.
At the centre of the controversy is the question of whether the country can use its crude oil resources to support lower domestic fuel costs without undermining government revenue or creating incentives for the diversion of petroleum products.
Oyedele’s remarks suggest that the Federal Government considers Nigerian crude a commercial asset subject to production expenses, contractual entitlements and competing financial obligations, rather than a resource whose entire daily output can be allocated to domestic refiners at government-determined discounted prices.
The debate is expected to remain significant as Nigeria navigates the relationship between crude oil production, domestic refining, petrol pricing, government revenue and the cost of living.