The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has communicated its resolve to enforce the domestic crude oil supply obligations to ensure adequate supply of crude oil to domestic refineries. This was revealed at a stakeholders’ meeting between NUPRC and oil producers on November 2023.
NUPRC enjoined the crude oil producers to provide the details of their committed and uncommitted barrels in order to enhance transparency and accountability. NUPRC’s resolve to enforce the domestic crude supply obligation is aimed at addressing the current challenges of availability of feedstock for local refiners.
The Domestic Crude Supply Obligation
The Petroleum Industry Act 2021 (PIA) empowers NUPRC to impose Domestic Crude Supply Obligations (DCSO) on upstream operators, licensees and lessees with the power to mandate the allocation of a specified percentage of
their produced crude oil and condensate for sale in the domestic market.
The sale to domestic market in fulfilment of DCSO by lessees is subject to the following conditions:
- i. crude oil may only be sold to operating refineries (“qualified buyer”);
- ii. the price for crude oil will be subject to negotiations, having regard to the prevailing international crude oil prices;
- iii. crude sales may be subject to payment guarantees as agreed by the parties; and
- iv. payment for crude oil supplied may be in United States Dollars or Naira, as may be agreed by the parties.