
Worried by reports of inadequate crude supply to domestic refiners in Nigeria, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has warned that it would henceforth deny export permits for crude oil cargoes intended for domestic refining, if oil companies do not fulfill their domestic crude obligations.
The commission insists that any changes to cargoes designated for domestic refining must receive express approval from the Commission Chief Executive.
Recall that the Dangote Refinery recently announced that it has resorted to crude importation from the United States as crude supply challenges was preventing it from reaching full refine capacity.
It disclosed that it was awaiting up to 12 million barrels of crude from U.S.
The refinery hopes to reach its 650, 000 barrels per day capacity in June this year, However, it alleged that low local crude supply from the Nigerian National Petroleum Company Limited (NNPC Ltd) is currently a challenge to this plan to ramp up daily production.
The NNPC is reportedly struggling to supply 350,000bpd to the Dangote refinery from the 450,000bpd crude meant for Nigeria’s local consumption.
With its current production capacity of 500,000bpd, officials said there is a need to look beyond the shores of Nigeria for the feedstock.
It was said that the feedstock needed by the refinery daily cannot be solely supplied by the state-owned oil company, NNPC.
In July last year, President Tinubu ordered the NNPC to sell crude oil to local refineries in naira.
According to the crude oil production forecast of producing oil companies and the refining requirement of functional refineries in Nigeria signed by the Chief Executive of the NUPRC, Gbenga Komolafe, the Dangote refinery would require 550,000 barrels of a blend of Nigerian crude oil daily, 17.05 million barrels monthly, and 99.55 million barrels between January and June 2025.
In a letter dated February 2, 2025, addressed to exploration and production companies and their equity partners, the NUPRC boss, Engr. Komolafe reiterated that diverting crude oil meant for local refineries violates the law.
At a meeting last weekend, attended by more than 50 critical industry players, both the refiners and producers blamed each other for the inconsistencies in the implementation of the Domestic Crude Supply Obligation (DCSO) policy. They, however, agreed that the regulator has put in place appropriate measures for effective implementation.
While the refiners claimed that producers were not meeting supply terms and preferred to sell their crude outside, forcing them to look elsewhere for feedstock, the producers countered that refiners hardly met commercial and operational terms, forcing them to explore other markets elsewhere to avoid unnecessary operational bottlenecks.
The regulator cautioned against any further breaches from either party. It advised refiners to adhere to international best practices in procurement and operational matters and reminded producers not to vary the conditions stated in the DCSO policy without obtaining express permission from the CCE before selling crude outside the agreed framework. This is to avoid abuse.
Engr. Komolafe referenced Section 109 of the Petroleum Industry Act (PIA) 2021, which aims to ensure a stable supply of crude oil to domestic refineries and strengthen the nation’s energy security, and stated that NUPRC will henceforth strictly enforce the policy regarding implementation and defaults by oil companies.
He stated that significant regulatory actions have already been taken by the Commission, in line with the enabling laws, to enforce compliance with the Domestic Crude Supply Obligation (DCSO). These actions include the development and signing of the Production Curtailment and Domestic Crude Oil Supply Obligation Regulation 2023, as well as the creation of the DCSO framework and procedure guide for implementation.
Also, during monthly meetings with upstream operators, NUPRC monitors compliance with production metrics that provide insight into available crude volumes two months in advance, facilitating discussions regarding supply commitments to refineries.
The CCE stressed that it will no longer tolerate violations of the laws governing domestic crude supplies to local refineries, as such actions have implications for the country’s energy security.
“Kindly note that the diversion of crude cargo designated for domestic refineries is a contravention of the law and the Commission will henceforth disallow export permits for designated crude cargos for domestic refining,” he warned.