The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has revealed that several oil producers pushed back against efforts to mandate local crude supply to Nigerian refineries including the Dangote Refinery.
According to the Commission’s report, many upstream producers refused to comply with the Domestic Crude Supply Obligation (DCSO) policy. These companies submitted formal letters either requesting waivers or explaining why they couldn’t meet the monthly allocations assigned to them.
The resistance came despite the gazetting of the Production Curtailment and DCSO Regulations in September 2023 and several high-level engagements between NUPRC, operators, and refinery owners.
Stakeholders Push Back
Pushback came mainly from members of the Independent Petroleum Producers Group (IPPG) and the Oil Producers Trade Section (OPTS), along with their equity partners. These producers expressed concerns over production capacity and existing sales contracts.
To tackle the issue, the NUPRC activated new strategies from February 2024, leveraging its production curtailment platform to facilitate supply to Dangote and other refineries. The Commission also demanded full disclosure of all crude sales agreements that could affect domestic allocation compliance.
Implementation Framework Developed
To ensure fairness and transparency, a multi-stakeholder working committee was formed in March 2024. Members included representatives from IPPG, OPTS, NNPC Upstream, refinery owners, and the Crude Oil Refinery-Owners Association of Nigeria. Together, they developed performance-based metrics to guide DCSO implementation, considering each producer’s operational capacity past, current, and forecasted.
By July 31, 2024, all producers with capacity exceeding 3,000 barrels per day were issued their DCSO targets for the remaining year. However, the resistance continued into August, with multiple letters seeking exemptions or delayed compliance.
Disputes Over Refiners’ Participation
The situation escalated when oil producers objected to refiners being present at curtailment meetings. Following these complaints, NUPRC formally disinvited refiners from the monthly meetings pending further notice.
In September, NNPC submitted a status update on crude supply to Dangote Refinery, while NUPRC reiterated its commitment to ensuring local refineries receive crude as required.
Regulatory Stand
Despite the resistance, NUPRC maintains that its implementation of DCSO aligns with the Petroleum Industry Act (PIA), which supports domestic energy security through local refining. The Commission stressed that it will continue to engage operators while upholding the law.
This standoff underscores the ongoing challenge of balancing upstream commercial interests with Nigeria’s broader push for refining self-sufficiency.