The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) yesterday said it was taking all necessary steps within the provisions of the Petroleum Industry Act (2021) to ensure an adequate and consistent supply of crude oil to the emerging refineries in the country.

Following this development, NUPRC has summoned a meeting with 52 crude oil exploration and production companies, in a bid to ensure the ramping up of feedstock for emerging refineries in the country.

In a statement signed by the commission’s Head of Public Affairs and Corporate Communications, Olaide Shonola, NUPRC warned that there would be consequences for sabotaging the process.

The commission explained that it would send wrong signals to the international business community if operators of domestic refineries in one of the world’s largest crude oil-producing countries started importing feedstock for their production.

NUPRC said it would advise the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to furnish it with the domestic crude oil requirement of the refineries in operation.

According to the commission, it was in contemplation of the inadequate supply of crude oil to the refineries that Section 109 of the Petroleum Industry Act (PIA) 2021 introduced the Domestic Crude Supply Obligation (DCSO) to Nigeria’s oil industry in a bid to ensure that domestic refineries are not starved of crude oil supply for their operation.

Many modular refinery operators had recently begun a campaign to draw attention to the scarcity of feedstock for their facilities despite the country being Africa’s biggest crude producer.

The commission stated that it had already taken some steps in furtherance of this goal by developing and signing the Production Curtailment and Domestic Crude Oil Supply Obligation (PC&DCSO) Regulation 2023, in line with the provisions of Section 109(2) of the PIA 2021.

This, it said, will include preparation for approval and implementation of the DCSO framework and procedure guide, processing of application for refinery feedstock approval as well as requesting all oil-producing companies to provide information on their planned crude oil off-take and existing sales purchase agreement.

The steps, it said, would also involve advising the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to furnish it with the domestic crude oil requirement of refineries in operation.

“NUPRC is determined to take further necessary steps required to avoid inadequate supply of crude oil to domestic refineries and would not hesitate, where necessary, to enforce the stipulated penalties for violations and non-compliance to the provisions of the Act.

“In pursuance to Section 109(2) of the PIA, the Commission gazetted the PC&DCSO Regulations which provides clarity on the obligations of the stakeholders.

“The law stipulates that the supply of crude oil to the domestic market shall be on a ‘willing buyer and willing seller’ basis and the NMDPRA shall report to the commission where there is inadequate supply to the refineries.

“The commission has a responsibility to publish on a biannual basis, the domestic crude refining requirements of operating refineries in Nigeria as received from NMDPRA, in line with Section 109(3) of the PIA.

“Where there is a reported crude supply shortage from the Authority, the commission is under obligation to issue a Request for Quotation (RFQ) to producers asking for submission of quotation for bridging the shortfall, whereupon the commission will contact affected refineries to facilitate contract negotiations between the stakeholders.

“Failure to meet the terms will attract from the commission an obligation on the oil producers to supply the required volumes and notify the Authority accordingly,” the statement added.

In furtherance of this, and in line with the commission’s mandate of ensuring crude oil supply to licensed refineries in Nigeria as enshrined in Section 109 (4) of the PIA, the NUPRC stated that all the 52 exploration and production companies have now been invited to a meeting on November 1, 2023.

According to the commission, this would ensure the alignment on the implementation of domestic crude oil supply obligation, operator’s compliance status, and operator’s response.