Assessing NUPRC’s new template for domestic crude oil supply

Nigeria, endowed with substantial crude oil reserves, has historically struggled with refining capacity and domestic supply shortages, despite being a major oil exporter. The country’s reliance on imported petroleum products has strained its economy and hindered industrial growth.

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) recently introduced a new template for the supply of crude oil in Nigeria, aimed at bolstering the activities of local refineries and ensuring the availability of petroleum products. This move, disclosed by Gbenga Komolafe, the CEO of NUPRC, during a recent press briefing in Abuja, aligns with Nigeria’s commitment to enhancing its domestic refining capacity and ensuring the sustainability of its oil industry. The introduction of the new template by NUPRC signifies a proactive step towards addressing these challenges by optimizing domestic crude oil utilization and promoting local refining activities

The development of the template by NUPRC is in compliance with the provisions of Section 109(2) of the Petroleum Industry Act (PIA), 2021. This regulatory framework outlines the obligations and procedures for domestic crude oil supply, ensuring transparency, accountability, and adherence to regulatory standards.

By establishing clear guidelines for crude oil supply obligations, NUPRC aims to streamline operations within the oil sector and enhance regulatory oversight.

Domestic refining capacity enhancement

One of the primary objectives of the new template is to boost the activities of local refineries in Nigeria. By ensuring a steady supply of crude oil to these refineries, NUPRC aims to optimize their production capacities, reduce dependence on imported petroleum products, and stimulate economic growth. Enhanced domestic refining capacity not only strengthens Nigeria’s energy security but also creates employment opportunities and fosters industrial development.

Sustainability and resource management

The introduction of the template underscores Nigeria’s dedication to sustainable management of its oil resources. NUPRC’s emphasis on domestic refining and consumption aims to extend the lifespan of the nation’s crude oil reserves. The Reserves Life Index demonstrates a strategic approach to resource management, striving to maintain a balance between production and long-term sustainability goals. By prioritizing domestic utilization, Nigeria can reduce reliance on exports and mitigate the depletion of its oil reserves. This sustainable strategy not only ensures the availability of oil for future generations but also promotes economic stability by fostering local refining capacity and reducing dependence on imported petroleum products. Overall, the template reflects a forward-thinking approach to resource management that aligns with Nigeria’s commitment to environmental stewardship and economic resilience in the face of evolving global energy dynamics.

Transparency and accountability

The template underscores the importance of transparency and accountability in allocating and using domestic crude oil supplies. Key provisions, such as publishing refining requirements and establishing reporting mechanisms for supply shortages, promote openness and integrity in allocation. Moreover, penalties for non-compliance or default act as deterrents against misconduct, fostering fair and equitable distribution of crude oil resources. By prioritizing transparency and accountability, the template lays a solid foundation for ethical practices and effective resource management within Nigeria’s oil sector. This emphasis on transparency not only enhances trust among stakeholders but also strengthens the overall regulatory framework, ensuring that the allocation process is conducted with integrity and in the best interest of the nation’s economic development.

Foreign exchange management

Offering payment options in either US dollars or naira demonstrates prudent foreign exchange management and promotes economic stability. This flexibility in currency choices within the template helps hedge against fluctuations in exchange rates, thereby reducing currency risks for both producers and refiners. Such a strategy enhances the resilience of Nigeria’s oil sector, particularly amid unpredictable global economic conditions. By adopting this approach, the template fosters a more robust and adaptable environment for transactions within the Nigerian oil industry.

Challenges and implementation

While the new template offers a promising framework for enhancing domestic crude oil supply, its effective implementation may face challenges. Ensuring the timely and accurate reporting of supply conditions, addressing logistical constraints in supply chain management, and enforcing compliance with regulatory requirements are key implementation challenges. NUPRC must collaborate with industry stakeholders, including oil producers, refiners, and regulatory agencies, to overcome these challenges and achieve the objectives outlined in the template.

In a nutshell, NUPRC’s introduction of a new template for domestic crude oil supply marks a significant milestone in Nigeria’s efforts to optimize its oil resources and strengthen the resilience of its oil sector. By prioritizing domestic refining capacity, promoting transparency and accountability, and addressing regulatory compliance, the template sets the stage for sustainable growth and development within the Nigerian oil industry. However, effective implementation, stakeholder collaboration, and ongoing regulatory oversight will be essential to realize the full potential of this initiative and overcome the challenges ahead.

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PETAN deepens collaboration with NUPRC, pledges to boost Nigeria’s oil production

Petroleum Technology Association of Nigeria (PETAN) has assured the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and all stakeholders in the oil and gas sector that its members with decades of experience in the industry, have all the equipment required to boost oil production in the country.

PETAN Chairman, Engr. Wole Ogunsanya, gave the assurance when he led a delegation of PETAN Executive on a courtesy visit to the Commission’s Chief Executive (CCE), Engr. Gbenga Komolafe at the NUPRC headquarters in Abuja.

In a statement signed by Publicity Secretary of PETAN, Dr. Engr. Innocent Akuvue, PETAN Chairman thanked the CCE for the good work that he’s doing for the country and  expressed PETAN’s support for government’s policies in the oil and gas industry, adding that as an advocacy group, PETAN is not unmindful of the challenges facing the industry, including low-level oil production.

According to the Chairman “We have the rigs, we have the services, untapped resources underground that needs to be tapped and supplied for refining in-country to serve our people. Consequently, we are here to state, just as we told the Hon. Minister of State for Petroleum Resources days ago that we are ready to help boost oil production levels at reduced cost of production using our marginal fields, equipment, and commitment to successfully delivering projects with reasonable incentives. At a time that assets are being sold off in divestment moves with Nigerians taking them over, the services of PETAN members will easily complement efforts to ensure maximum production capacity of oil in the country”.

He further pledged PETAN’s support for the three road shows of the NUPRC to raise funds for further explorations, adding that PETAN is bringing in several other service companies such as the AFRIEXIM bank to help actualize the goal of shoring up investments.

Responding, the Commissioner Chief Executive (CCE) of the NUPRC, Engr. Gbenga Komolafe congratulated the new PETAN Chairman, and expressed excitement by the enthusiasm of the new PETAN EXCO, adding that it is encouraging to have PETAN’s support in the well challenged Nigerian oil and gas industry, saying that the multidimensional challenges pose grave concerns for the government, who stands ready for stronger collaboration with stakeholders such as PETAN to navigate the challenges.

He noted that PETAN remains a source of hope in the industry, especially in areas of exploration and production, as well as the development of human capital within the sub-region, which serves as a source of pride to stakeholders.

On divestments in the industry, he submitted that divestment are nothing but business decisions, and they present opportunities for ability in disability. “I’m so excited that we have indigenous capacities thanks to PETAN, that can deliver on projects and demonstrate outstanding capacity (Sterling Global). We are also proud of the platform (SAIPEC) that PETAN presents annually to address issues affecting the industry. Our planned road shows are also planned to drive the funding required to drive investments which are often lacking offshore, and we look forward to PETAN’s collaboration on this. ”

Further discussions and contributions from the visiting team centered around payments to indigenous operators for projects executed, application of dispute resolution mechanisms and regulations of the Commission to ensure sanity in the way business is conducted to protect all key players; addressing oil theft; helping to shape regulations and new processes for the industry to ensure proper hyrocarbon accounting; deeper collaboration through workshops and meetings between the Commission and PETAN’s 13 Technical Interest Groups (TIGs) for information-exchange as well as creating a model and  benchmark for cost of production.

The PETAN team comprised of the Chairman, Engr. Wole Ogunsanya FNSE, Assistant Secretary,  Dr. Okey Ukaegbu, Financial Secretary, Mr. Akin Osuntoki, Ex-officio, Dr. Ibilola Onadeko-Amao Ph.D FEI FNSE FIoD FAEng, Member, Mr. Solomon Ewenehi, Executive Secretary, Engr. Kevin Nwanze and Media Assistant/Abuja Liaison Officer, Mrs. Zainab Alimi-Ajibola.