The Nigerian Upstream Petroleum Regulatory Commission has called for the consistent supply of crude oil to domestic refineries, particularly in anticipation of the upcoming Dangote refinery.
Mr. Gbenga Komolafe, the Chief Executive of NUPRC, disclosed this on Wednesday during the meeting with operators of domestic refineries in Abuja.
Komolafe, emphasized the importance of this move, stating that it aligns with the Petroleum Industry Act and domestic obligations imposed on oil producers.
He stressed the significance of Nigeria meeting its domestic refining obligations, stating that it would have a positive impact on the pricing of refined petroleum products.
Komolafe said, “Good enough we have the largest refinery in Africa, the Dangote refinery. It is ready to commence operations. We’ve received a request from the refinery to guarantee feedstock to the 650,000 barrels refinery, and we believe that as a nation, it will be a shame if we cannot meet the refinery’s feedstock.”
“We are a nation with a huge crude oil reserve, about 38 billion barrels. So we are blessed as a nation, but despite the crude oil reserves I mentioned, we are a net exporter of crude oil and a net importer of refined products.
“And from the data, we are all aware of, our inability to meet our domestic refining obligation has impacted negatively on the state of our economy, given the number that we roll out in terms of under-recovery that we incurred during the fuel subsidy regime.
“We all understand that if we can meet our domestic refining obligations, we will be able to impact mainly on some of the attendant costs in pricing the refined products.
“So it behoves on us all as an industry to find a way to make Nigeria a net exporter of refined products, and that is the issue that we gather here to address.”
To meet their domestic supply obligations, oil producers must allocate a portion of their production for domestic consumption.
However, these allocations can only be made to companies with active licenses and those currently in operation. The commission is tasked with ensuring these obligations are met.
The NUPRC boss emphasized the need for all producers to provide information on their outstanding purchase agreements with refiners.
Failure to comply with domestic supply obligations could result in the denial of export permits for crude oil.
Komolafe reassured that the NUPRC would address concerns raised by oil companies regarding transaction currency, differences in crude processing capabilities, and non-disclosure clauses in contracts, and focus on the obligations to refiners rather than prices.
Despite the earlier announcement that the Dangote refinery would receive its first crude oil cargo, it has yet to commence operations.
