Under the federal government’s directive, the Nigeria Upstream Petroleum Regulatory Commission (NUPRC) has rolled out new mandates. These directives compel oil producers to vend crude oil to domestic refineries, marking a strategic shift to diminish reliance on imported refined products.
Per the new regulations, Nigerian oil companies must provide crude to local refineries that cannot secure it domestically. Exporting crude is only permissible after meeting these domestic obligations.
NUPRC will mediate between local refiners and producers if crude supply agreements hit roadblocks, facilitating sales via a willing-buyer, willing-seller arrangement.
The regulations outline that payments to domestic refiners for crude can be settled in dollars, naira, or a blend of both. The implementation of the Domestic Crude Oil Supply Obligation initiative is scheduled for the latter half of the year, and specific procurement quotas for each refinery have yet to be finalized.
Background Context
In January, NUPRC mandated oil producers allocate approximately 483,000 barrels per day (bpd) to local refineries. The lion’s share, around 325,000 bpd, is earmarked for the Dangote refinery, which boasts a capacity of 650,000 barrels.
Other beneficiaries include the Warri and Port-Harcourt refineries, which are projected to receive 75,000 and 54,000 barrels per day. Smaller refineries like Waltersmith, OPAC, and Niger Delta Petroleum Refinery are set to receive up to 10,000 barrels daily.
This initiative, dubbed the Domestic Crude Supply Obligation Guidelines (DCSO), aligns to reduce petroleum product imports. Enshrined within the Petroleum Industry Act (PIA) passed in 2021, these measures ensure domestic refineries receive a portion of Nigeria’s crude, safeguarding against shortages.
