NUPRC Bans Crude Diversion Meant for Local Refineries

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has announced that it will no longer grant export permits to oil companies that fail to supply crude oil to local refineries as required. This decision comes after reports that some companies have been exporting crude meant for domestic refining.

In a statement issued in Abuja, the Commission emphasized that any changes to cargoes designated for domestic refining must receive explicit approval from the Commission’s Chief Executive, Engr. Gbenga Komolafe. He stated that diverting crude oil intended for local refineries violates the law.

At a recent meeting attended by over 50 key industry players, both refiners and producers blamed each other for inconsistencies in implementing the Domestic Crude Supply Obligation (DCSO) policy. Refiners claimed that producers were not meeting supply terms and preferred to sell their crude elsewhere, forcing them to seek feedstock from other sources. Producers, on the other hand, argued that refiners rarely met commercial and operational terms, compelling them to explore other markets to avoid unnecessary operational challenges.

The NUPRC has warned against further breaches from either party and advised refiners to adhere to international best practices in procurement and operations. Producers are reminded not to alter the conditions stated in the DCSO policy without obtaining express permission from the Commission’s Chief Executive before selling crude outside the agreed framework.

Engr. Komolafe referenced Section 109 of the Petroleum Industry Act (PIA) 2021, which aims to ensure a stable supply of crude oil to domestic refineries and strengthen the nation’s energy security. He stated that the NUPRC will strictly enforce the policy regarding implementation and defaults by oil companies.

Significant regulatory actions have already been taken by the Commission, including the development and signing of the Production Curtailment and Domestic Crude Oil Supply Obligation Regulation 2023, as well as the creation of the DCSO framework and procedure guide for implementation.

In related news, the price of Nigeria’s Bonny Light crude oil has risen to $65.85 per barrel following a recent meeting between OPEC and non-OPEC members. This increase reflects ongoing developments in the global oil market.

The NUPRC‘s enforcement of domestic crude supply obligations is expected to enhance the performance of local refineries and ensure a steady supply of petroleum products within Nigeria.