NUPRC Warns Oil Producers to Fulfill Domestic Crude Obligations or Face Sanctions

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has issued a stern warning to oil producers, stressing the importance of meeting their domestic crude supply obligations or facing potential sanctions. This directive is part of the commission’s efforts to ensure a steady supply of crude oil to local refineries, which are vital for Nigeria’s energy security and economic stability.

In a significant move, NUPRC announced that it would deny export permits for crude oil cargoes intended for domestic refining if oil companies fail to meet their domestic crude obligations. The commission also emphasized that any changes to cargoes designated for local refineries must receive prior approval from the commission’s chief executive.

In a letter dated February 2, 2025, addressed to exploration and production companies and their equity partners, NUPRC Chief Executive Officer (CEO) Gbenga Komolafe reiterated that diverting crude oil meant for local refineries is a violation of the law.

The warning comes after a meeting held last weekend, which brought together over 50 key industry players. During the session, both refiners and producers exchanged blame over the inconsistencies in the implementation of the Domestic Crude Supply Obligation (DCSO) policy. Despite the tensions, both parties agreed that NUPRC had implemented the necessary measures to ensure the policy’s effective execution.

Refiners argued that producers were not fulfilling their supply commitments and were instead selling their crude abroad, forcing them to seek alternative sources of feedstock. Producers, on the other hand, countered that refiners often failed to meet commercial and operational terms, leading them to explore other markets to avoid operational challenges.

NUPRC has warned both sides to avoid any further violations, urging refiners to adhere to international best practices in procurement and operations. Producers were reminded not to alter the conditions outlined in the DCSO policy without obtaining prior approval from the CEO before redirecting crude intended for local refineries to external markets.

Komolafe referenced Section 109 of the Petroleum Industry Act (PIA) 2021, which aims to ensure a stable supply of crude oil to domestic refineries and strengthen the nation’s energy security. He emphasized that NUPRC would rigorously enforce compliance with the DCSO policy and take significant regulatory actions against any defaults by oil companies.

As part of its ongoing efforts to monitor compliance, NUPRC has developed and signed the Production Curtailment and Domestic Crude Oil Supply Obligation Regulation 2023, as well as established a DCSO framework and implementation procedure guide. The commission also tracks production metrics during monthly meetings with upstream operators, which provide valuable insight into available crude volumes and facilitate discussions on supply commitments to refineries.

Komolafe concluded by stressing that any further violations of laws governing domestic crude supplies to local refineries would no longer be tolerated, as such actions have a direct impact on the country’s energy security. “The diversion of crude cargo designated for domestic refineries is a contravention of the law, and the Commission will henceforth disallow export permits for designated crude cargos for domestic refining,” he warned.