The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has directed oil exploration and production companies to comply strictly with the Crude Oil Supply Obligation (DCSO) for local refineries, warning that failure to do so will result in the denial of export permits.
In a circular issued by its Public Affairs Unit on Monday, the commission emphasized that crude oil cargoes designated for domestic refining must not be diverted without explicit approval from its Chief Executive.
This directive comes amid growing concerns over crude supply shortages faced by local refiners, including the Dangote Refinery. According to NUPRC data, the facility is expected to process 550,000 barrels per day and 17.05 million barrels monthly in the first half of the year. However, sources at the refinery allege that the government has not met this target, with suppliers insisting on partial payment in US dollars.
In a letter dated February 2, 2025, and addressed to exploration and production companies and their equity partners, NUPRC Chief Executive Gbenga Komolafe reaffirmed that diverting crude oil meant for local refineries constitutes a legal violation.
Citing Section 109 of the Petroleum Industry Act 2021, which mandates stable crude oil supply to domestic refineries and bolsters national energy security, Komolafe stressed that the commission would now enforce stricter compliance measures and penalize defaulters.
“The diversion of crude cargo designated for domestic refineries is a violation of the law, and the Commission will henceforth disallow export permits for such cargoes. All cargoes designated for domestic refining can only be altered with the express approval of the Commission Chief Executive. The above is for your strict compliance,” the letter read.
He also highlighted regulatory measures already taken to enforce compliance, including the implementation of the Production Curtailment and Domestic Crude Oil Supply Obligation Regulation 2023, as well as the development of a procedural framework for monitoring adherence.
Stakeholder Meeting Addresses Compliance Challenges
As part of efforts to resolve the ongoing supply challenges, a stakeholder meeting involving over 50 key industry players was held last weekend. Discussions revealed disagreements between refiners and producers over the implementation of the DCSO policy.
While refiners accused producers of prioritizing exports over local supply commitments, forcing them to seek alternative sources of feedstock, producers countered that refiners often failed to meet commercial and operational terms, necessitating alternative market options to avoid financial losses.
Despite these disputes, both parties acknowledged that the regulator has introduced necessary measures to ensure compliance. The NUPRC cautioned against further breaches, advising refiners to adhere to international best practices in procurement and operations.
The commission also reminded producers that any deviation from the DCSO policy must receive prior approval from the Chief Executive before crude can be sold outside the agreed framework.
Reiterating the government’s stance, Komolafe warned that violations of domestic crude supply regulations would no longer be tolerated, emphasizing that non-compliance threatens Nigeria’s energy security.
