The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has revealed that efforts to enforce domestic crude supply to local refineries, including the Dangote Petroleum Refinery, faced resistance from several upstream oil producers last year.
In its latest report, the commission disclosed that oil companies pushed back against the Domestic Crude Supply Obligation (DCSO), submitting formal letters requesting waivers or explaining why they could not meet the monthly crude allocations under the policy.
“Several pushbacks from the Independent Petroleum Producers Group (IPPG), Oil Producers Trade Section (OPTS), some producers and their equity partners were received via formal letters, either requesting waivers on the allocated monthly obligations or giving detailed explanations why they might not be able to meet the volumes,” the report stated.
The resistance came despite multiple stakeholder engagements and the gazetting of the Production Curtailment and Domestic Crude Supply Obligation Regulations in September 2023 under the Petroleum Industry Act.
To implement the DCSO, the NUPRC facilitated crude supply to Dangote refinery and other domestic plants using the monthly production curtailment platform from February 2024, requesting all exploration and production companies to submit details of crude sales agreements that could impact domestic supply.
In March 2024, the commission set up a working committee with representatives from industry groups, refinery owners, and the NNPC Upstream Investment Management Services to develop a framework for enforcing the DCSO policy. It also designed allocation metrics based on each producer’s operational capacity before issuing bi-annual daily obligations.
These guidelines, approved by NUPRC Chief Executive Gbenga Komolafe on July 11, 2024, led to the issuance of domestic crude obligations for the rest of the year to companies producing above 3,000 barrels per day by July 31, 2024.
However, by August, the NUPRC reported continued pushbacks from producers and their partners seeking exemptions or citing challenges in meeting the obligations.
Additionally, oil producers objected to the participation of refiners in production curtailment meetings, prompting the NUPRC to suspend refiners’ attendance at these meetings from September 2024.
Despite these challenges, the commission maintained that it continued to facilitate crude supply to local refineries, including Dangote, to support domestic refining and reduce dependence on fuel imports.
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