The Nigerian Upstream Petroleum Regulatory Commission has directed exploration and production companies to strictly adhere to the Crude Oil Supply Obligations for local refineries.

The commission also warned that it would deny export permits for crude oil cargoes intended for domestic refining if oil companies fail to meet their local crude supply commitments.

In a circular issued by its Public Affairs Unit on Monday, the regulatory body stressed that any changes to cargoes designated for domestic refining must receive express approval from the Commission?s Chief Executive.

This directive follows complaints from local refiners, including the Dangote Refinery, over difficulties in securing adequate crude supplies, raising concerns about Nigeria?s energy self-sufficiency.

According to NUPRC data, the Dangote Refinery is expected to process 550,000 barrels per day and 17.05 million barrels per month in the first half of the year.

However, sources at the refinery claim the government has not met this demand, with suppliers requesting partial payment in US dollars.

In a letter dated February 2, 2025, addressed to exploration and production companies and their equity partners, the Commission Chief Executive, Gbenga Komolafe, reiterated that diverting crude oil meant for local refineries violates the law.

Citing Section 109 of the Petroleum Industry Act 2021, which ensures a stable supply of crude oil to domestic refineries and strengthens national energy security, Komolafe stated that NUPRC will now strictly enforce the policy and penalise defaulters.

He noted that the commission has already taken significant regulatory actions to enforce compliance with the Domestic Crude Supply Obligation. These include developing and signing the Production Curtailment and Domestic Crude Oil Supply Obligation Regulation 2023, as well as creating the DCSO framework and procedure guide for implementation.

?Kindly note that the diversion of crude cargo designated for domestic refineries is a violation of the law, and the Commission will henceforth disallow export permits for such cargoes.

?All cargoes designated for domestic refining can only be altered with the express approval of the Commission Chief Executive. The above is for your strict compliance,? the letter read.

Our correspondent gathered that, as part of efforts to resolve the issue, a stakeholder meeting attended by more than 50 key industry players was held last weekend.

At the meeting, both refiners and producers blamed each other for inconsistencies in implementing the Domestic Crude Supply Obligation policy.

Refiners claimed that producers were failing to meet supply terms and instead preferred to sell crude abroad, forcing them to seek alternative sources of feedstock. Conversely, producers argued that refiners rarely met commercial and operational terms, compelling them to explore other markets to avoid operational bottlenecks.

However, both sides acknowledged that the regulator has implemented appropriate measures to ensure compliance.

The commission cautioned against further breaches from either party.

It advised refiners to adhere to international best practices in procurement and operational matters and reminded producers that any variation of the DCSO policy conditions requires express approval from the CCE before selling crude outside the agreed framework. This, it said, is to prevent abuse.

The CCE warned that it would no longer tolerate violations of domestic crude supply regulations, stressing that non-compliance threatens Nigeria?s energy security. (The PUNCH)

Update news