NUPRC rejects Dangote refinery’s claim of poorly enforced crude supply obligation

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has denied insinuations by the management of the Dangote Petroleum Refinery that it has not properly enforced the domestic crude supply obligation (DCSO).

In a statement in Abuja on Friday, the NUPRC said it facilitated the supply of 29 million barrels of crude oil to the Dangote refinery between January and June.

On Thursday, the Dangote refinery said NUPRC has been reluctant to enforce the domestic crude supply obligation and ensure that it receives its full crude requirement from Nigerian National Petroleum Company (NNPC) Limited and international oil companies (IOCs).

However, NUPRC said as part of its commitment to enforce section 109 of the Petroleum Industry Act, 2021, which provides the domestic supply of crude to local refineries on a ‘willing buyer, willing seller’ basis, it ensured that nine refineries were supplied crude despite low oil production.

The NUPRC said despite its efforts to enforce the crude oil obligations through the development of the DCSO framework, the Dangote refinery was still accusing it of weak enforcement.

The commission said it has facilitated over 32 million barrels of crude oil supply to domestic refineries in the country.

“The NUPRC took an additional step to ensure that crude producers furnish the commission with copies of all crude oil sales and purchase agreements entered or any security interest entered, that is tied to crude oil production,” the commission said.

“The commission on several occasions has also engaged Dangote and local refiners to ensure their supply quota is met in line with the provisions of the PIA.”

The NUPRC said it has facilitated the domestic supply of crude oil to the Dangote refinery and other refiners using the monthly production curtailment platform.

“These strategic commitments to Nigeria’s energy security have led to the facilitation of the supply of 32 million barrels of crude to Dangote Refinery and other local producers in the first half of 2024,” the commission said.

BREAKDOWN OF DISTRIBUTION OF CRUDE OIL

NUPRC said nine refineries have benefitted from the 32,088,122 barrels of crude — with Dangote alone getting a total of 29,047,098 barrels out of the total supply in the first half of 2024.

“The Warri Refinery received 949,670 barrels; NDPR-NDPR Refinery got 823,395 barrels of crude; the Port Harcourt Refinery received 471,123 barrels; Seplat-WPSOL Refinery was allocated 419,541 barrels while Waltersmith-WSPOL Refinery got 296,353 barrels,” the commission said.

“Other beneficiaries were Edo Refinery that got 58,504 barrels of crude and Du-port Refinery that was supplied 22,438 barrels of crude.”

According to NUPRC, Aradel Refineries Ltd in Ogbele, Rivers State, has 11,000 barrels per day (bpd) capacity; OPAC Refineries, Kwale, Delta state, has a capacity of 10,000 bpd; while Waltersmith Refinery in Ohaji-Egbema, Imo State, has a 50,000 bpd capacity.

“Edo Refinery & Petrochemical Company Ltd, has a capacity of 1,000 bpd; Dangote Refinery Ibeju-Lekki, Lagos State, has 650,000 bpd capacity; (Old) Port-Harcourt Refinery, Rivers State has a capacity of 54,000 bpd while that of Warri Refinery, Delta State is 75,000 bpd,” NUPRC said.

“Much as the NUPRC has tried to ensure the enforcement of the provisions of Section 109 of PIA, 2021, the producers have equally responded to the regulator saying that conventionally oil production is funded through pre-export financing.

“This means that crude has been pledged for funding and the whole transaction is guided by the ‘Doctrine of the Sanctity of Contracts’. The parties already agreed that the licensees would pay the cost of the development and they explained to the commission that most of the funding was provided by traders at a mutually agreed price.”

Aside from that, NUPRC said producers equally reported some operational challenges on the part of refiners.

“In fulfilment of the NUPRC mandate to enforce section 109 of the PIA, the NUPRC has ensured that international standard practices are followed in a manner that will not scare investors and further worsen the already weak revenues from crude oil,” the commission said.

In the pursuit of its mandate, the NUPRC said if it becomes necessary for it to withdraw licences, the commission will do so but it will not resort to the “presumptuous and arbitrary” withdrawal of licences because of the sanctity of contracts.