The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has issued a directive compelling oil exploration and production companies to strictly adhere to the Crude Oil Supply Obligations for domestic refineries. This policy aims to ensure that local refineries receive a steady supply of crude oil for processing. Failure to meet these obligations could lead to the denial of export permits for crude oil cargoes intended for export, as the commission seeks to address concerns regarding Nigeria’s energy self-sufficiency.
NUPRC’s new policy follows complaints from local refiners, including the Dangote Petroleum Refinery, about challenges in securing sufficient crude supplies. The Dangote refinery, which is expected to process 550,000 barrels per day in the first half of 2025, has faced difficulties, including the demand for partial payment in US dollars from suppliers. NUPRC has stressed that changes to crude cargoes designated for domestic refining must receive explicit approval from the commission’s Chief Executive.
In a letter to oil firms dated February 2, 2025, NUPRC’s Chief Executive, Gbenga Komolafe, reiterated that diverting crude oil from local refineries is a violation of the law. The letter referenced Section 109 of the Petroleum Industry Act 2021, which mandates a stable supply of crude oil to domestic refineries and bolsters national energy security. The commission has taken regulatory actions such as signing the Production Curtailment and Domestic Crude Oil Supply Obligation Regulation 2023 to enforce compliance.
A recent meeting between refiners and oil producers revealed a blame game between both parties, with refiners accusing producers of diverting crude oil to international markets, and producers claiming that refiners failed to meet operational and commercial terms. Despite this, both parties acknowledged that NUPRC’s enforcement measures are necessary to resolve the issue and ensure compliance with the Domestic Crude Supply Obligation (DCSO) policy.
The commission has now warned against further violations, urging both producers and refiners to adhere to the established guidelines. It reminded oil firms that any changes to the domestic crude supply agreements, including the sale of crude to international markets, must be authorized by NUPRC to prevent abuse and ensure Nigeria’s energy security remains intact.
Source: Punch