NUPRC, Oil Producers Fine-tune Domestic Crude Supply Challenges

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has restated its commitment to enforcing compliance of the Domestic Crude Supply Obligations (DCSO) by oil producers to boost the country’s energy security.

In an effort to ensure smooth operations of the domestic crude supply obligations by oil, the NUPRC convened a meeting with key oil and gas stakeholders in Abuja, to discuss and fine-tune issues related to domestic crude supply obligations between producers and refiners.

According to the commission, the meeting, which has become routine, presented a platform for the management of NUPRC, members of the Oil Producers Trade Section (OPTS) and the Independent Petroleum Producers Group (IPPG) to collaborate on ensuring that the upstream sector operates effectively within established laws while also considering the commercial interests of all stakeholders.

At the meeting, the OPTS and IPPG sought clarifications on certain operational challenges regarding pre-allocation of crude oil to domestic refiners, pre-existing contracts amid domestic crude supply obligations and pricing issues.

NUPRC chief executive, Gbenga Komolafe while reassuring stakeholders of the Commission’s commitment to fostering growth within the oil sector, stressed that regulatory standards will be upheld to protect commercial interests and avoid arbitrary actions that could dissuade operators or hinder investments.

Recall that the NUPRC had announced strict enforcement measures regarding compliance with DCSO, including potential denial of export permits for non-compliant operators.

Komolafe clarified that the reference to export permit denial was not a threat to legitimate industry players, but specifically directed at non-compliant operators who may seek shortcuts, and in breach of the law.

To ensure consistent supply of crude oil to domestic refiners, the Commission early this month announced that significant regulatory actions to enforce compliance with the Domestic Crude Supply Obligation (DCSO) have been put in place, including the development and signing of the Production Curtailment and Domestic Crude Oil Supply Obligation Regulation 2023 along with the implementation of a DCSO framework and procedure guide.

The Commission had emphasised that it would strictly enforce policies regarding implementation and defaults by oil companies and would not hesitate to deny export permits for crude oil intended for domestic refining if companies fail to meet their obligations.

Komolafe emphasised that the government is committed to protecting the interests of investors but will not compromise on issues that could jeopardise energy security or undermine national interests.

The CCE reiterated the government’s stance on not interfering with product pricing, as long as prices remain reasonable and fair.

He expressed commitment to the willing-seller, willing-buyer option which aligns with international best practices and affirmed that the government would support the upstream sector’s optimal functioning without resorting to price-fixing.

He assured that the Commission was at all times willing to positively address operational issues brought up by industry stakeholders so long as they would aid the growth of the sector and are in line with national interest.

In January, the Commission outlined a five-point agenda that would aid increased oil production in 2025. This includes effectively implementing initiatives to boost production by one million barrels, enhancing the transparency and accuracy of hydrocarbon measurement through metering and cargo regulations, digitalising upstream regulatory activities for better compliance, optimising unit costs per barrel to increase revenue and conducting licensing bid rounds to revitalise non-performing assets in line with the provisions of the Petroleum Industry Act (PIA) 2021.

The CCE also revealed that the Commission has developed a template to identify the needs of every participant within the value chain.

This template aims to address gaps by leveraging the capabilities of different players, thus fostering collaboration, networking and operational optimisation.

Wednesday’s meeting was in line with the initiative, to identify and address the needs of stakeholders as they arise in the course of operation.