The Federal Government of Nigeria and crude oil producers have committed to ensuring a sustainable supply of crude oil to local refineries, adopting a market-determined pricing system.
This collaboration aims to balance the interests of crude oil producers and refineries, ensuring that refineries have adequate feedstock while allowing producers to operate optimally.
The Nigeria Upstream Petroleum Regulatory Commission (NUPRC) has instructed oil refiners to provide monthly price quotes on crude supply. This directive came as the $20 billion Dangote Petroleum Refinery is reportedly increasing its importation of crude oil from the United States, according to Bloomberg.
In a statement issued in Abuja, the NUPRC highlighted that oil producers, represented by the Oil Producers Trade Section of the Lagos Chamber of Commerce and Industry, agreed to a framework to ensure that local refineries are not adversely affected by market prices.
The meeting, called by NUPRC Chief Executive Gbenga Komolafe, focused on the Framework for Seamless Operationalisation of Domestic Crude Oil Supply Obligation Template, in line with the Petroleum Industry Act (PIA) 2021.
Komolafe emphasized President Bola Tinubu’s commitment to creating a fair business environment for both producers and refiners. He stressed the need for clear rules to ensure that crude pricing does not negatively impact domestic refineries.
“We need to have the price quotes monthly,” he directed.
Komolafe also highlighted the link between the Domestic Crude Oil Supply Obligation and Nigeria’s energy security.
He assured that the NUPRC is re-engineering its regulatory processes to address existing challenges, aiming for transparency and fairness in all operations.
The NUPRC is dedicated to enforcing the willing buyer/willing seller provision.
Komolafe stated, “We have to discuss pricing, especially as parties have committed to respecting their domestic crude oil obligation. The regulator is very alive to that.
In crude pricing we will never allow price strangulation to disincentivize our domestic refining capacity optimization.”
The regulator does not support cost under-recovery in the upstream sector, and we will continue to work to ensure that crude supply profiteering as a negative factor that can strangulate our domestic refining capacity optimisation is disallowed,” Komolafe declared.
