The Nigerian federal government has made it illegal to send crude oil to refineries in the United States. This choice was made after it was found that about 500,000 barrels of crude oil a day that was supposed to be processed locally was being sold on international markets to make quick money in foreign exchange.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has warned that it will not issue export permits for any crude oil cargo that is going to be processed in Nigeria unless its head officer specifically gives the go-ahead.
Chief Executive Officer of the National Petroleum Resources Commission (NUPRC), Engr. Gbenga Komolafe, told exploration and production companies and their equity partners that rerouting crude oil that was meant for domestic use is against the rules that are already in place.
In their report, the committee made it clear that any changes to how these cargoes are distributed must first be approved by the agency's top official. Not long ago, there was a meeting with more than fifty of the most important people in the business.
As the talk went on, oil suppliers and refiners traded accusations about how the Domestic Crude Supply Obligation (DCSO) policy wasn't being applied consistently. In their defence, refiners said that producers were not honouring their supply agreements and instead sold oil abroad, which meant that refiners had to get feedstock from other markets.
In the meantime, producers have said that refiners are not following the agreed upon economic and operational standards. This means that producers have no choice but to look for new markets. At the same time, the regulatory body said again that it would strictly implement the DCSO regulation.
Komolafe made it clear that the limits came from Section 109 of the Petroleum Industry Act (PIA) 2021. This part is meant to make sure that Nigeria's factories always have access to crude oil and to improve the country's energy security.
A lot of important legal steps have already been taken by the commission. The Production Curtailment and Domestic Crude Oil Supply Obligation Regulation 2023 is one of these steps. There is also a full organisation and process guide for the DCSO.
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