Nigeria To Mandate Oil Producers To Provide Crude For Domestic Refining

The Commission Chief Executive, of the Nigerian Upstream Petroleum Regulatory Commission, NUPRC, Gbenga Komolafe, is engaging oil producers in the country to ensure deployment of crude to local refiners as the country readies to boost domestic refining capacity.

The  oil industry regulator met with producers and local refiners to fix implementation of a policy mandating crude sales to domestic refineries, the head of the agency said

Nigeria relies on imports for most of its fuel needs due to inadequate refining capacity, but a new 650,000 barrels a day plant by Aliko Dangote will make it self-sufficient and able to export abroad.

The Domestic Crude Oil Supply Obligation (DCSO), introduced under the petroleum industry law in 2021, aims to boost local refining capacity and reduce reliance on imported fuels.

However, Komolafe acknowledged difficulties with the policy which could threaten national oil production targets and hinder smooth implementation.

Key concerns include producers’ existing contracts that do not reflect the DCSO, delays in payment guarantee from refineries and logistical hurdles such as last-minute vessel changes.

“Our aim is to identify and address these challenges effectively, with the ultimate goal of ensuring a seamless and efficient allocation process by the oil producers and off-take by the domestic refiners,” Komolafe said on Tuesday.

“Our priority is to uphold the integrity of the DCSO framework while fostering a conducive environment for the sustainable growth of Nigeria’s oil and gas industry,” he added, highlighting the meeting’s objective to address concerns raised by oil producers and refiners, especially Dangote Refinery, the country’s largest privately owned plant.

While a Committee with industry representatives is working on a framework for smoother DCSO implementation, Komolafe emphasized the need for direct talks with oil company Chief Executives “since the buck stops on your desk,” he said.