The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) says it will enforce crude supply obligations to local refineries.
The Commission Chief Executive, Engr. Gbenga Komolafe said this on November 1, while meeting with crude suppliers in Abuja.
According to him, the NUPRC is committed to upholding the domestic crude oil supply requirements outlined in the Petroleum Industry Act (PIA) of 2021 to ensure ample crude oil provision to local refineries.
During the stakeholder meeting held at the Commission’s headquarters in Abuja, Engr. Komolafe emphasized the need for compliance with the prevailing laws set out in the Petroleum Industry Act.
He particularly highlighted Section 109 of the Act, which mandates the NUPRC to allocate domestic crude oil supply obligations based on the National Crude Oil demand requirement supply curve to respective lessees.
He stated further that the Commission will enforce all aspects of the PIA and he urged crude oil producers to consistently provide the NUPRC with details regarding their committed and uncommitted barrels.
This, he emphasized, would enhance transparency and accountability within the industry.
He also mentioned that the 2021 Petroleum Industry Act grants the commission authority to penalize any industry player found in violation of the regulations pertaining to domestic crude oil supply obligations.
Meanwhile, the Executive Secretary of the Nigerian Extractive Industry Transparency Initiative (NEITI), Mr. Orji Ogbonnaya Orji, praised the NUPRC for its continuous engagement with stakeholders in the oil and gas sector, noting that such interactions foster investor confidence.
Insights on the current plight of local refiners
During a July 2023 interview with Arise News, Momoh Oyarekhua, the Chairman of the Crude Oil Refineries Association of Nigeria (CORAN) highlighted the challenges faced by modular refineries, such as difficulties in accessing crude supplies from operators and the requirement to pay for crude oil in dollars rather than in the local currency, the naira.
As he advocated for the purchase of crude oil in naira, he aligned it with local refiners’ domestic sales currency. This move, he explained, would alleviate pressure on the foreign exchange market, considering that their income from refined products would be in naira, thus creating a balance and reducing dependency on foreign currency.
Expressing that if these local refineries received adequate support and had access to crude oil from nearby operators, they could directly refine the crude and supply it to the market, reducing the need for pipeline transportation.
Emphasizing the benefits, he mentioned that this process would save costs by bypassing the need for extensive security measures against crude oil theft.
He noted the hurdles faced by modular refineries in attracting equity partners due to various challenges within Nigeria’s oil industry, including feedstock issues.
