The Federal Government, through the Nigeria Upstream Petroleum Regulatory Commission (NUPRC), has reached an agreement with oil producers to permit the sale of crude oil to domestic refiners at market prices.
This resolution brings an end to a protracted supply dispute that has strained relations with international oil companies (IOCs).
The NUPRC explained that pricing issues should not hinder domestic refining, adding that it is committed to preventing “crude supply profiteering” while ensuring oil production remains profitable.
Gbenga Komolafe, Chief Executive of the NUPRC, said the regulator’s responsibility is to balance upstream development with a sustainable domestic energy supply chain.
“We will never allow price strangulation to disincentivize our domestic refining capacity optimization,” Komolafe said. To ensure transparency, he requested monthly cargo price quotes on crude oil supply and delivery from both producers and refiners.
Earlier this year, the NUPRC directed local and international oil companies to prioritize supplying crude oil to local refineries.
The regulator set a target of 483,000 barrels to local refineries, with the Dangote refinery expected to receive 325,000 barrels daily.
The Warri and Port Harcourt refineries are slated to receive 75,000 and 54,000 barrels per day, respectively, while smaller refineries like Waltersmith, OPAC, and Niger Delta Petroleum Refinery are set to receive 10,000 barrels per day or less.
In April, the NUPRC mandated that all oil companies in Nigeria supply crude oil to domestic refineries unable to source it locally before exporting any surplus.
The Petroleum Industry Act (PIA) mandates that IOCs must first meet local demand by supplying crude oil to domestic refineries before exporting any surplus.
Last month, Devakumar Edwin, Vice President of Oil and Gas at Dangote Industries Limited (DIL), accused IOCs in Nigeria of deliberately attempting to undermine the Dangote Oil Refinery and Petrochemicals.
Edwin claimed that IOCs were inflating premium prices above market rates, forcing the refinery to import crude from distant countries like the United States, resulting in significantly higher costs.
The Dangote refinery, with a capacity of 650,000 barrels per day, is expected to significantly reduce Nigeria’s dependence on imported petrol, especially in the era of post-subsidy removal.
The NUPRC’s agreement with oil producers to sell crude at market prices is a pivotal step in strengthening the country’s refining capacity and ensuring a stable domestic energy supply.
This move is anticipated to bolster Nigeria’s oil industry and contribute to the nation’s economic stability.