Regulatory Measures to Ensure Domestic Crude Supply
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has announced that it will not issue export permits to oil companies that fail to meet their domestic crude supply obligations. This decision is part of broader efforts to enhance energy security and support local refining operations in Nigeria.
During the second Nigeria Refining Summit held in Lagos, the NUPRC’s Chief Executive, Gbenga Komolafe, was represented by Boma Atiyegoba, an official from the Commission. The event, themed “Refining – Key to Energy Security in Africa,” highlighted the importance of ensuring a stable supply of crude oil for local refiners.
Komolafe explained that the NUPRC, in collaboration with the Nigerian Midstream and Downstream Petroleum Regulatory Authority, determines the crude requirements of local refiners every six months. The Commission ensures that producers meet their supply obligations as mandated by the Petroleum Industry Act (PIA). According to him, clear regulatory instruments have been developed to enforce compliance, with companies failing to supply crude to local refineries being denied export permissions.
“When that is done, there is a metric that is developed by the Commission and agreed upon by all the stakeholders that is used to allocate the volumes that are expected from the different oil and gas producers for the domestic oil supply obligation,” he said during a panel session.
Komolafe emphasized that the crude supply obligation is not a voluntary arrangement but a legal and regulatory requirement aimed at improving Nigeria’s energy security. He stated, “Now, this oil supply obligation is not a request; it is a regulatory obligation to help improve our energy security in Nigeria.”
Once allocations are made, the Commission monitors compliance through export permit and vessel clearance controls. Komolafe explained, “When we get the allocation, we distribute it accordingly to the companies, and we use parts of their production forecast and other indices to determine the volume that we allocate to the companies. When that is done, what we do further is to enforce the obligation.”
The regulator outlined two main instruments for enforcement: export permits and vessel clearance. If companies fail to fulfill their domestic obligations, they will not be allowed to export at any point during oil and gas production. Additionally, vessel clearance is prioritized for domestic obligations.
This move is part of ongoing measures to ensure that crude is available to local refineries such as Dangote, Waltersmith, and other modular refiners. These efforts align with the government’s agenda to achieve self-sufficiency in petroleum products and end fuel importation.
However, concerns have been raised by the Crude Oil Refinery Owners Association of Nigeria (CORAN), which has reported that local refiners continue to face difficulties in accessing crude despite the provisions of the PIA. CORAN President, Mr. Momoh Oyarekhua, criticized the “willing buyer, willing seller” clause in the PIA, arguing that it undermines the domestic supply obligation. He called for stricter enforcement to ensure that refiners receive the feedstock needed to operate.
Oyarekhua stressed that without a consistent crude supply, Nigeria’s refining dream cannot be sustained. He stated, “In sustaining refining in Nigeria, there must be crude. There must be the availability of crude.”
The NUPRC, however, reaffirmed its commitment to implementing the law and ensuring that producers fully comply with their domestic supply mandates before being allowed to export crude oil.
Key Points of the Regulation
- The NUPRC will not grant export permits to oil companies that fail to meet domestic crude supply obligations.
- The regulation is designed to strengthen energy security and support local refining operations.
- The Commission collaborates with the Nigerian Midstream and Downstream Petroleum Regulatory Authority to determine crude requirements for local refiners.
- Clear regulatory instruments have been developed to enforce compliance, including export permits and vessel clearance controls.
- The crude supply obligation is a legal requirement under the Petroleum Industry Act.
- Local refiners, including Dangote and Waltersmith, are targeted to ensure a stable supply of crude.
- Concerns have been raised by CORAN about challenges in accessing crude despite the PIA provisions.
- The NUPRC remains committed to enforcing the law and ensuring compliance with domestic supply mandates.
