Nigeria’s Federal Government and Oil Producers Collaborate for Sustainable Crude Oil Supply to Local Refineries
The Federal Government of Nigeria and the country’s oil producers have reached an agreement to ensure a sustainable supply of crude oil to local refineries under a market-determined pricing system. This move aims to balance the interests of oil producers and refineries, ensuring that the latter are not deprived of necessary feedstock due to high prices. The agreement was reached during a meeting called by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
During the meeting, key industry leaders including Osagie Okunbor, Managing Director of Shell Petroleum Development Company of Nigeria Ltd (SPDC); Jim Swartz, Managing Director of Chevron; Matthieu Bouyer, Managing Director/Chief Executive of Total Energies; Bolondi Fabrizio, Managing Director of Nigerian Agip Oil Company; and Samson Ezugworie, Chief Operating Officer of Seplat, discussed the framework for a domestic crude oil supply obligation template. The meeting was part of efforts to effectively implement key sections of the Petroleum Industry Act (PIA) 2021, with a focus on pricing and crude supply to domestic refineries.
Engr. Gbenga Komolafe, Chief Executive of the NUPRC, emphasized the importance of creating a mutually beneficial framework to ensure local refineries are not hindered by high crude oil prices. He highlighted President Bola Tinubu’s commitment to providing a level-playing field for both producers and refiners, ensuring fair and transparent business practices within the industry.
Komolafe directed producers and refiners to submit monthly cargo price quotes on crude supply and delivery to the NUPRC for effective monitoring and regulation. He stressed the need for transparent processes and adherence to rules of engagement to ensure that the pricing model does not negatively impact domestic refineries. The goal is to prevent cost under-recovery in the upstream sector and avoid any pricing practices that could hinder domestic refining capacity.
The meeting also addressed the convergence between the Domestic Crude Oil Supply Obligation (DCOSO) and Nigeria’s energy security. Komolafe assured stakeholders that the NUPRC is re-engineering its regulatory processes to address challenges and promote sustainable energy supply in the midstream and downstream sectors. He reiterated the commission’s commitment to driving the “willing buyer/willing seller” provision and ensuring that all parties respect their domestic crude oil obligations.
In conclusion, Komolafe emphasized that the NUPRC will continue to work towards attracting necessary investments to boost upstream development and optimize Nigeria’s hydrocarbon resources. The regulator is focused on ensuring that crude supply profiteering does not hinder the country’s domestic refining capacity, thus supporting the overall sustainability and growth of Nigeria’s energy sector.