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Diverting local refineries crude violates Nigeria’s law, NUPRC warns oil firms

THE Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has sent a note of warning to oil companies and their partners that diverting crude oil meant for local refineries violates the law.

It gave the warning in a letter dated February 2, 2025, addressed to exploration and production companies and their equity partners, a circular reportedly issued by its Public Affairs Unit on Monday, February 3, stated.

It said it would deny export permits for crude oil cargoes intended for domestic refining if oil companies fail to meet their local crude supply obligations.

“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.

At a meeting attended by more than 50 critical industry players over the weekend, crude oil refiners and producers were said to have blamed each other for the inconsistencies in the implementation of the Domestic Crude Supply Obligation (DCSO) policy.

While the refiners claimed that producers were not meeting supply terms and preferred to sell their crude outside, forcing them to look elsewhere for feedstock, the producers countered the claim that refiners hardly met commercial and operational terms, forcing them to explore other markets elsewhere to avoid unnecessary operational bottlenecks.

The circular noted that the NUPRC chief executive, Gbenga Komolafe, stressed that diverting crude oil meant for local refineries violates the law, urging the oil companies to strictly adhere to the Crude Oil Supply Obligations for local refineries.

He cited 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 said the NUPRC will henceforth strictly enforce the policy regarding implementation and defaults by oil companies, hinting that the commission would take actions to enforce compliance with the DCSO.

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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, Komolafe said.

The commission also 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 its express approval before selling crude outside the agreed framework to prevent abuse.

Komolafe also warned he would no longer tolerate violations of domestic crude supply regulations, stressing that non-compliance threatens Nigeria’s energy security.




     

     

    Meanwhile 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, which is equivalent to 85 per cent of capacity.

    The chief executive, Aliko Dangote, had reportedly said the 650,000-bpd capacity refinery had only received five crude cargoes from the state oil firm, Nigerian National Petroleum Company Limited (NNPCL), since it started operating earlier this year, instead of the 15 it expected.

    He noted that as a result, the refinery has had to increase crude imports due to insufficient domestic supplies.

    The ICIR can report that the NNPCL had in the past agreed to supply the refinery 300,000 bpd but it is struggling with low production and some of its crude is being exchanged for gasoline imports.

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