NUPRC: No more export permits for crude oil cargoes meant for domestic refineries

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has warned oil production companies to strictly adhere to crude oil supply obligations to local refineries.

According to a statement by NUPRC on Monday, Gbenga Komolafe, the commission’s chief executive officer (CEO), gave the warning in a letter dated February 2, addressed to exploration and production companies and their equity partners.

NUPRC said the warning followed a meeting which took place recently.

The commission said the refiners and producers blamed each other at the meeting for the inconsistencies in the implementation of the domestic crude supply obligation (DCSO) policy.

“They, however, agreed that the regulator has put in place appropriate measures for effective implementation,” NUPRC said.

“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 that refiners hardly met commercial and operational terms, forcing them to explore other markets elsewhere to avoid unnecessary operational bottlenecks.”

However, Komolafe said the commission will henceforth deny export permits for crude oil cargoes intended for domestic refining if oil companies do not fulfil their domestic crude obligations.

He also said any changes to cargoes designated for domestic refining must receive express approval from the commission’s chief executive.

Citing Section 109 of the Petroleum Industry Act 2021, Komolafe said NUPRC will now strictly enforce the policy and penalise defaulters.

“Refiners must adhere to international best practices in procurement and operational matters and reminded producers not to vary the conditions stated in the DCSO policy without obtaining express permission from the CCE before selling crude outside the agreed framework This is to avoid abuse,” Komolafe said.

He added that significant regulatory actions have already been taken by NUPRC, in line with the enabling laws, to enforce compliance with the DCSO.

“These actions include the development and signing of the Production Curtailment and Domestic Crude Oil Supply Obligation Regulation 2023, as well as the creation of the DCSO framework and procedure guide for implementation,” the CEO said.

“Also, during monthly meetings with upstream operators, NUPRC monitors compliance with production metrics that provide insight into available crude volumes two months in advance, facilitating discussions regarding supply commitments to refineries.”

He said the diversion of crude cargo designated for domestic refineries is a contravention of the law.

Komolafe added that non-compliance with regulations has implications for the country’s energy security.