The Independent Petroleum Producers Group (IPPG) has cautioned against any attempts to compel its members to sell crude oil to local refineries, including the Dangote Refinery.
In a letter addressed to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) Chief Executive, Gbenga Komolafe, and dated August 16, 2024, IPPG Chairman Abdulrazak Isa urged the Nigerian National Petroleum Company Limited (NNPCL) to redirect its allocated crude oil volumes to domestic refineries to alleviate the current supply shortages affecting local fuel production.
Isa emphasized that while some IPPG members are already supplying crude oil to local refineries, the NNPCL is better positioned to address the shortfall by leveraging its statutory allocation of 445,000 barrels per day.
He suggested that this volume should be reserved for domestic consumption under a price hedge mechanism facilitated by financial institutions like Afrexim Bank.
Isa, however, stressed that any national production above this allocated volume should be treated as export-bound under the international market’s willing buyer, willing seller framework.
He also voiced concerns over recent developments, including crude supply requests from the Dangote Refinery for October, which he argued conflict with the Petroleum Industry Act’s principles.
Isa called for transparency in the crude allocation process, requesting that the NUPRC provide clear details on how allocations are determined and allow IPPG to contribute to the production forecast to ensure it aligns with operational realities.
This issue has sparked significant debate, particularly as international oil companies have been accused of refusing to sell crude to local refineries, leading to President Bola Tinubu’s directive for NNPCL to sell feedstock to these refineries in naira.
The Federal Government announced that the new arrangement would commence in October.
The controversy deepened when the Dangote Group accused international oil companies of prioritizing foreign markets over local refineries, leading to higher domestic crude prices.
The NUPRC, however, denied these allegations, stating that it had facilitated the supply of over 29 million barrels of crude oil to the Dangote Refinery and other domestic facilities between January and June 2024.
In response, the Dangote Group claimed it had not received the 29 million barrels, except for one cargo negotiated directly with NNPCL, arguing that local refineries should be allowed to purchase crude directly from domestic producers rather than through international intermediaries.
