Nigeria Commits to Sustainable Crude Oil Supply for Local Refineries
The Federal Government of Nigeria and crude oil producers in the country have agreed to work together towards a sustainable supply of crude oil to local refineries under a market-determined pricing system. The goal is to ensure that while crude oil producers do business optimally, refineries are not starved of feedstock.
The Nigeria Upstream Petroleum Regulatory Commission (NUPRC) has directed oil refiners to provide monthly price quotes on crude supply, with the aim of promoting transparency and effective monitoring of transactions. This commitment comes as the $20 billion Dangote Petroleum Refinery reportedly ramps up the importation of crude oil from the United States.
According to NUPRC’s statement, the commission is committed to attracting investments to boost upstream development and optimization of Nigeria’s hydrocarbon resources, while ensuring sustainability of domestic energy supply in the midstream and downstream sectors.
The NUPRC’s Chief Executive, Gbenga Komolafe, emphasized the need for a rule of engagement to ensure that the pricing model from oil producers does not hinder domestic refineries. He directed producers and refiners to provide the NUPRC with cargo price quotes on crude supply and delivery for effective monitoring and regulation.
Dangote’s Vice President of Oil and Gas, Devakumar Edwin, had earlier raised alarm over the refusal of International Oil Companies (IOCs) to sell crude oil to the Dangote refinery at market prices, forcing the refinery to import crude from the United States. Edwin accused IOCs of frustrating the survival of the refinery by hiking prices above market rates.
However, the NUPRC has emphasized the importance of appropriate pricing to drive willing buyer/willing seller provision, citing the need to prevent price strangulation that could disincentivize domestic refining capacity optimization.
The commitment to sustainable crude oil supply is expected to promote the growth of Nigeria’s domestic refining industry, reduce dependence on imported refined petroleum products, and create jobs and opportunities for local communities.
