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NUPRC to Sanction Crude Producers Not Fulfilling Refineries Quota

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The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) will sanction crude oil producers in Nigeria who routinely flout the Domestic Crude Supply Obligation (DCSO) to local refineries.

The regulator warned that henceforth it would deny export permits for crude oil cargoes intended for domestic refining, if oil companies do not fulfill their domestic crude obligations as contained in the Petroleum Industry Act (2021).

A statement noted that this was contained in a letter dated February 2, 2025, addressed to exploration and production companies and their equity partners.

In the official communication with the oil producers, the Commission’s Chief Executive, Mr Gbenga Komolafe, reiterated that diverting crude oil meant for local refineries violates the law and would be met with sanctions.

The issue of insufficient local crude oil production have persisted and this has raised worries from local producers.

Now, the commission insisted that any changes to cargoes designated for domestic refining must receive express approval from its chief executive, going forward.

According to the statement, the NUPRC also convened a meeting at the weekend, attended by more than 50 critical industry players, to sort out any differences hindering the supply of feedstock to Nigerian refineries.

The statement disclosed that at the meeting, both the refiners and producers blamed each other for the inconsistencies in the implementation of the domestic crude supply obligation policy, even though they agreed that the regulator had put in place appropriate measures for effective implementation.

“While the refiners claimed that producers were not meeting supply terms and preferred to sell their crude outside, forcing them to look elsewhere for feedstock, the producers countered that refiners hardly met commercial and operational terms, forcing them to explore other markets elsewhere to avoid unnecessary operational bottlenecks.

The regulator cautioned against any further breaches from either party and advised refiners to adhere to international best practices in procurement and operational matters and reminded producers not to vary the conditions stated in the DCSO policy without obtaining express permission from the chief executive before selling crude outside the agreed framework.

“This is to avoid abuse,” the NUPRC pointed out.

Mr Komolafe referenced Section 109 of the PIA, 2021, which aims to ensure a stable supply of crude oil to domestic refineries and strengthen the nation’s energy security.

He stated that NUPRC would henceforth strictly enforce the policy regarding implementation and defaults by oil companies, adding that significant regulatory actions had already been taken by the commission, in line with the enabling laws, to enforce compliance with the DCSO.

These actions, MrKomolafe reiterated, included the development and signing of the Production Curtailment and Domestic Crude Oil Supply Obligation Regulation 2023, as well as the creation of the DCSO framework and procedure guide for implementation.

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