The Nigerian Upstream Petroleum Regulatory Commission (NUPRC), on behalf of the federal government, has introduced new regulations mandating oil producers to prioritize selling crude oil to local refineries.
This strategic move aims to lessen the country’s reliance on imported refined products.
Under the new regulations, all oil companies operating in Nigeria are obligated to supply crude to domestic refineries that cannot source it locally. Only after fulfilling these domestic supply obligations are producers allowed to export crude.
In cases where agreements on crude supply cannot be reached directly between local refiners and producers, the NUPRC will act as an intermediary. It will facilitate the arrangement of a sales purchase agreement based on a willing-buyer, willing-seller model.
Payments for crude supplied to domestic refiners can be made in either dollars, naira, or a combination of both, as outlined in the regulations.
The implementation of the Domestic Crude Oil Supply Obligation initiative is scheduled for the second half of the year. However, the specific quantity of crude each refinery is required to procure has yet to be determined.