FG sets up committee to resolve dispute on domestic crude supply to refineries

Heineken Lokpobiri, minister of state for petroleum resources (oil), says the federal government has set up a committee to resolve the dispute on domestic crude supply to the Dangote refinery and other local refineries.

In a statement on Thursday, Lokpobiri said the committee will investigate the disagreements among industry stakeholders.

He directed the committee, headed by the permanent secretary, to provide a report between Monday and Tuesday.

The minister stressed that all stakeholders are responsible for enforcing the Petroleum Industry Act (PIA), particularly concerning domestic crude oil supply obligations.

“We remain committed to promoting local refining and creating an enabling environment for players in the sector, fostering a sustainable and thriving oil sector, ensuring compliance with the PIA and safeguarding the interests of all stakeholders,” Lokpobiri said.

“In respect of this, I convened a crucial meeting to address the recent misunderstandings surrounding the regulation on domestic crude supply, which has sparked concerns among industry stakeholders.

“It became evident that a collaborative approach was necessary to resolve the issues at hand, and to this end, a committee has been set up with the task of reviewing the concerns raised by all parties involved.”

In recent months, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Dangote refinery were locked in a conflict over domestic supply.

On August 9, the NUPRC had denied allegations by the refinery of failing to uphold the PIA by not properly enforcing the domestic crude supply obligation (DCSO) regulation to ensure product availability to local refiners.

The commission said it facilitated the supply of 29 million barrels of crude oil to the Dangote refinery between January and June.

However, Anthony Chiejina, group chief, branding and communications officer of Dangote Group, said NUPRC did not facilitate any crude supply, noting that it did not receive 29 million barrels as claimed by the agency.

According to Chiejina, the regulator said it cannot implement its own Act because of the “sanctity of a contract”.

“Aside from the term supply we bilaterally negotiated with NNPCL, so far NUPRC has only facilitated the purchase of one crude cargo from a domestic producer. The rest of the cargoes we have processed were purchased from international traders,” he said.

“All we are asking for is for refineries in Nigeria to buy crude directly from the companies that produce it in Nigeria rather than from international middlemen.”

In July, the federal executive council (FEC) approved a proposal by President Bola Tinubu, directing the Nigerian National Petroleum Company (NNPCL) Limited to sell crude oil to the Dangote refinery and other refineries in naira.

The federal government, on August 15, inaugurated a technical subcommittee to ensure the smooth implementation of President Bola Tinubu’s directive to sell crude to local refineries in naira.

Wale Edun, minister of finance, had said the sale of crude oil to the Dangote refinery in naira will commence on October 1.