Nigeria’s Oil Regulator Orders Refiners to Provide Monthly Price Quotes Amid Crude Supply Shortage
In a move to sanitize the industry and ensure a sustainable supply of crude oil to local refineries, Nigeria’s Upstream Petroleum Regulatory Commission (NUPRC) has directed oil refiners in the country to provide monthly price quotes on crude supply. The directive comes amid a shortage of crude supply to Dangote Refinery and other local refineries.
According to NUPRC Chief Executive Gbenga Komolafe, the directive is aimed at ensuring that local refineries are not starved of feedstock while operators do business optimally. Komolafe emphasized the need for transparency, stating that the regulator will never allow price strangulation to disincentivize domestic refining capacity optimization.
The Nigerian Federal Government and crude oil producers have committed to working towards a market-determined pricing system, which is expected to improve the supply of crude oil to local refineries. This development comes amidst concerns that International Oil Companies (IOCs) are frustrating the Dangote Refinery’s commencement of fuel supply by selling crude oil at higher prices.
Dangote Refinery, which has a daily capacity of 650,000 barrels, has reportedly looked to the United States for crude supply after facing challenges in meeting its demand. Despite these challenges, the Chairman of the Dangote Group, Aliko Dangote, has insisted on commencing the supply of fuel by mid-July 2024.
The NUPRC’s directive is part of efforts to effectively implement key sections of the Petroleum Industry Act (PIA) 2021, particularly with regards to pricing and crude supply to domestic refineries. The regulator has pledged to work towards ensuring that crude supply profiteering does not hinder the optimization of domestic refining capacity.
With this directive, Nigeria is taking steps to address the challenges faced by its oil industry and ensure a sustainable supply of crude oil to meet the growing demands of its refineries.
