TheCable

The Nigerian Upstream Regulatory Commission (NUPRC) has issued new rules requiring oil producers to sell crude to domestic refineries before attending to foreign demands.

The commission, on March 27, had given its enforcement committee 48 hours to produce a template for the implementation of domestic crude oil supply obligation (DCSO) in Nigeria.

According to Bloomberg, under the regulations, all oil firms in the country will be obliged to supply crude to domestic refiners that can not independently source supplies locally. 

As per the NUPRC measures, producers are only entitled to export crude after meeting their domestic supply obligations. 

The NUPRC will function as an intermediary between local refiners and producers in cases where a deal can not be reached on crude supply, facilitating a purchase agreement on a willing buyer, willing seller model. 

According to the regulations, payments for crude to domestic refiners can be made in dollars, naira or both.

The regulator said it plans to implement the domestic crude oil supply obligation measure in the second half of the year.

The volume that each refinery will need to take has not been determined yet, according to the publication.

“Local refiners in Africa’s largest crude producer have complained of being starved of feedstock by oil firms, which prefer exports to earn dollars and avoid the risk of holding a weakening local currency,” the publication said.

“In addition to the 650,000-barrels-a-day Dangote Refinery, there are at least five operational modular refineries in Nigeria producing diesel and kerosene as well as the state-owned Port Harcourt refinery that is also expected to come on stream this year.”

On January 30, it was reported that the Dangote refinery would import US crude, after receiving from the Nigeria National Petroleum Company (NNPC) Limited and Shell International Trading and Shipping Company Limited (STASCO).

The publication also reported Dangote refinery bought one supertanker of West Texas Intermediate (WTI) Midland from PetroChina for May 1-10 arrival.