The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has issued a stern warning to oil companies, stating that export permits for crude oil cargoes designated for domestic refining will be denied if companies fail to meet their domestic crude supply obligations. The Commission emphasized that any changes to cargoes meant for local refineries must receive explicit approval from the Commission Chief Executive (CCE).
In a letter dated February 2, 2025, addressed to exploration and production companies and their equity partners, the CCE, Engr. Gbenga Komolafe, reiterated that diverting crude oil intended for domestic refineries constitutes a legal violation. “Kindly note that the diversion of crude cargo designated for domestic refineries is a contravention of the law and the Commission will henceforth disallow export permits for designated crude cargos for domestic refining,” he warned.
At a recent meeting attended by over 50 key industry stakeholders, refiners and producers exchanged blame over the inconsistent implementation of the Domestic Crude Supply Obligation (DCSO) policy. Refiners accused producers of prioritizing foreign sales over meeting local supply commitments, forcing them to source feedstock elsewhere. In contrast, producers argued that refiners frequently fail to meet commercial and operational terms, compelling them to seek alternative markets to avoid operational disruptions.
The NUPRC urged both parties to cease such breaches immediately. The Commission advised refiners to align with international best practices in procurement and operations, while reminding producers that any deviations from the DCSO policy require express permission from the CCE before selling crude outside the stipulated framework.
Referencing Section 109 of the Petroleum Industry Act (PIA) 2021, Engr. Komolafe highlighted the Act’s role in ensuring a steady crude supply to domestic refineries and bolstering Nigeria’s energy security. He stated that the NUPRC will strictly enforce compliance with the DCSO policy, citing actions already taken, such as the development and signing of the Production Curtailment and Domestic Crude Oil Supply Obligation Regulation 2023 and the establishment of the DCSO framework and procedural guide.
The Commission also monitors compliance during monthly meetings with upstream operators, reviewing production metrics to forecast available crude volumes two months ahead. This proactive approach facilitates discussions on supply commitments to refineries, aiming to mitigate potential shortfalls. The NUPRC’s decisive stance signals a critical shift towards reinforcing Nigeria’s energy security framework. By holding both producers and refiners accountable, the Commission aims to curb the long-standing issue of crude oil diversions that undermine domestic refining capacity. However, the success of these measures will depend on consistent enforcement, transparent regulatory oversight, and the willingness of industry players to prioritize national interests over short-term commercial gains. This balanced approach could be the key to stabilizing Nigeria’s energy sector and reducing reliance on imported refined products.