By Nigerian News Agency
Thank you for reading this post, don't forget to subscribe!The Federal Government of Nigeria and crude oil producers have pledged to ensure a steady supply of crude oil to local refineries at market-determined prices. This commitment aims to enable optimal business operations for oil producers while ensuring that refineries have adequate feedstock.
The Nigeria Upstream Petroleum Regulatory Commission (NUPRC) has directed oil refiners to provide monthly price quotes on crude supply to facilitate this process. This directive comes as the $20 billion Dangote Petroleum Refinery reportedly ramps up crude imports from the United States, according to Bloomberg.
In a statement issued on Thursday, the NUPRC explained that oil producers, represented by the Oil Producers Trade Section of the Lagos Chamber of Commerce and Industry, agreed to a mutually beneficial framework at a recent meeting. This framework aims to prevent local refineries from being constrained by high crude prices.
“The meeting, led by Commission Chief Executive Gbenga Komolafe, reviewed the Framework for Seamless Operationalisation of Domestic Crude Oil Supply Obligation Template. This is part of our efforts to implement key sections of the Petroleum Industry Act (PIA) 2021, particularly regarding pricing and crude supply to domestic refineries,” the NUPRC stated.
Komolafe emphasized President Bola Tinubu’s commitment to providing a level playing field for both producers and refiners. He stressed the importance of a pricing model that does not disadvantage domestic refineries and instructed producers and refiners to submit monthly price quotes for effective monitoring.
“The convergence of the Domestic Crude Oil Supply Obligation with national energy security necessitates transparent regulatory processes. We aim to ensure that crude pricing does not hinder domestic refining capacity,” Komolafe added.
He further highlighted that the NUPRC supports the willing buyer/willing seller provision and is committed to preventing cost under-recovery in the upstream sector. “We will not allow crude supply profiteering to negatively impact our domestic refining capacity,” he declared.
Dangote Raises Concerns
Devakumar Edwin, Vice President of Oil and Gas at Dangote Industries Limited, recently accused International Oil Companies (IOCs) of attempting to undermine the new Dangote Petroleum Refinery by hiking local crude prices above market rates. This, he said, has forced the refinery to import crude from the United States, increasing production costs.
“The IOCs seem intent on ensuring that our refinery fails by demanding exorbitant premiums or claiming that crude is unavailable. At times, we have paid $6 above the market price, compelling us to reduce output and import crude from the US,” Edwin stated.
He added that the IOCs’ actions appear designed to maintain Nigeria as an exporter of crude oil and an importer of refined products, thereby creating wealth for their home countries while keeping Nigeria dependent on imported fuel.
NUPRC’s Commitment
In response, the NUPRC emphasized the importance of appropriate pricing to support the willing buyer/willing seller model, referencing the Fiscal Oil Price guidelines published by the commission in accordance with the PIA.
“NUPRC is dedicated to attracting investments to enhance upstream development and optimize hydrocarbon resources, ensuring sustainable domestic energy supply in the midstream and downstream sectors,” the commission stated.
Crude Importation
Bloomberg reported that Nigeria’s Dangote mega-refinery is increasing its importation of crude oil from the United States. The Lagos-based refinery has purchased over 16 million barrels of West Texas Intermediate crude oil this year, with the proportion of US crude expected to rise further in the coming months.
