The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) took decisive action on Tuesday by activating Section 109(2) of the Petroleum Industry Act (PIA), initiating the Industry Review of domestic crude oil supply obligations (DCSO).
During a meeting held at the NUPRC headquarters in Abuja, Chief Executive Gbenga Komolafe underscored the paramount importance of prioritizing crude supply to local refineries to achieve the government’s objective of transforming Nigeria into a net exporter of refined petroleum products.
Komolafe emphasized the need for producers to fulfill their domestic crude oil supply obligations, thereby strengthening the country’s domestic refining capacity and facilitating the transition away from the subsidy regime. He addressed concerns raised by industry stakeholders and expressed the Commission’s commitment to resolving issues within the next 48 hours.
Key concerns raised during the meeting included:
- Inability to align contractual agreements with the provisions of the law.
- Challenges related to vessel nomination changes and financial instrument requirements.
- Delays in vessel arrivals impacting production targets.
- Frequent changes in crude oil allocation to domestic refineries and loading terminal delays.
The federal government has underscored the criticality of meeting domestic crude obligations to local refineries, especially in light of concerns surrounding oil production’s failure to meet budgetary targets and the anticipated commissioning of new refineries in 2024.
Mr. Momoh Oyarekhua, Chairman of OPAC Refinery, highlighted the inadequate crude oil supply received by local refiners over the past three years. Despite having a refining capacity of 10,000 barrels per day, OPAC Refinery received only 1,500 barrels per day in 2022. Oyarekhua also emphasized the urgent need for clarity on payment currency for crude oil supplied to local refineries.
Oil producers in attendance echoed the necessity of additional investment to meet local refinery demands, citing existing supply contracts and operational constraints. Representatives of the Oil Producers Trade Section (OPTS) and Independent Petroleum Producers Group (IPPG) urged the government to address industry challenges promptly.
In response, the NUPRC directed a committee to develop a clear implementation template for domestic crude oil supply obligations within 48 hours, fostering seamless execution of the review process.
The meeting provided a platform for domestic crude oil refiners and stakeholders to collaborate on enhancing crude production and supply, underscoring the imperative of addressing industry challenges to facilitate sustainable growth and development.
