Petroleum regulator finally takes action after Dangote lament non crude supply by IOCs

• Domestic oil refiners are now required by the NUPRC to provide a monthly price quote for crude supply
• Producers and the commission have come to an agreement for the sale of crude to local refiners at market rates
• The NUPRC head said it was the regulator's responsibility to strike a balance between upstream development and domestic supply

Legit.ng journalist Zainab Iwayemi has over 3-year-experience covering the Economy, Technology, and Capital Market.

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has ordered domestic oil refiners to submit a monthly price quote for crude supply.

NUPRC expressed the necessity for a rule of engagement to guarantee that the oil producers' pricing mechanism does not impede domestic refineries. Photo Credit: Energy Intelligence
Source: Getty Images

In addition, the commission has reached an agreement with producers to permit sales of crude to domestic refiners at market prices, resolving a supply dispute that had soured relations with foreign oil companies.

To effectively monitor and regulate parties' transactions, the NUPRC instructed producers and refiners to furnish the commission with cargo price quotes on oil supply and delivery.

This decision was issued by the NUPRC during a meeting with the crude producers, which was organised by the Lagos Chamber of Commerce and Industry's Oil Producers Trade Section.

In a statement, NUPRC head Gbenga Komolafe said that the meeting resolved to accept a framework that would be advantageous to all parties in order to prevent local refineries from being choked by off-the-curve prices.

New deal

A deal was reached in response to the Dangote Refinery's allegations that oil majors were impeding local crude purchases by claiming they were out of supplies or by requiring exorbitant fees.

In a statement, NUPRC emphasised that pricing could not be a barrier to local refining.

NUPRC’s chief Gbenga Komolafe said following talks with oil companies grouped under the Oil Producers Trade Section (OPTS),

While he did not support any loss-making in the oil industry, he stated that the regulator would seek to prevent "crude supply profiteering."

Komolafe said it was the regulator's responsibility to strike a balance between upstream development and a sustainable domestic energy supply chain.

Monthly cargo price quotes

To maintain transparency, Komolafe demanded monthly cargo price quotes on crude oil supply and delivery from both producers and refiners.

He expressed the need for a rule of engagement to ensure that the pricing model used by oil producers does not hinder domestic refineries.

The regulator stressed that it does not support cost under-recovery in the upstream sector and that it will continue to work to ensure that crude supply profiteering as a negative factor that can str*ngulate domestic refining capacity optimisation is disallowed.

FG gives order to oil companies

Legit.ng reported that the Nigerian Upstream Petroleum Regulatory Commission stated that it will mandate foreign oil corporations to provide crude oil to the Dangote oil refinery.

Olaide Shonola, the NUPRC spokesperson, stated that the commission was stepping in to guarantee that domestic crude sales to Dangote and other refineries would continue.

Shonola made this statement in response to the Dangote Group chairman's assertion that foreign oil corporations were unwilling to supply the refinery with crude.

Source: Legit.ng