Nigeria's NUPRC: Domestic Crude Oil Swap Plan to Boost Refinery Supply

• The NUPRC has initiated consultations on a domestic crude oil and gas swap arrangement to reduce supply costs and increase availability of crude for Nigerian refineries.
• The proposal aims to strengthen compliance with domestic crude supply obligations and optimize existing logistics and supply networks.
• Discussions are still at an early stage, and all necessary modalities must be agreed upon before implementation.
• The initiative could have significant implications for the pricing and availability of Nigerian crude oil for refineries.
• Lawyers and compliance officers should closely monitor the development of this initiative.

The proposed arrangement would enable producers and refiners to optimize existing logistics and supply networks by allowing producers with export facilities to meet the obligations of those closer to domestic refineries, eliminating unnecessary transportation costs.

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has initiated consultations with industry stakeholders on a domestic crude oil and gas swap arrangement. This proposal aims to reduce supply costs, increase the availability of crude for Nigerian refineries, and strengthen compliance with domestic crude supply obligations. The NUPRC's Chief Executive, Oritsemeyiwa Eyesan, disclosed this during a visit to the Nigerian Midstream and Downstream Petroleum Regulatory Authority in Abuja. According to Eyesan, the swap arrangement would enable producers and refiners to optimize existing logistics and supply networks by allowing producers with export facilities to meet the obligations of those closer to domestic refineries, eliminating unnecessary transportation costs.

The proposed crude oil swap arrangement is expected to strengthen compliance with the Domestic Crude Supply Obligation (DCSO) and Domestic Gas Supply Obligation. The Petroleum Industry Act provides for transactions to be conducted at competitive prices, but pricing remains a major consideration in domestic crude transactions. Despite significant improvements in crude deliveries to local refiners, some refineries still rely on foreign crude imports due to the premium prices charged by local producers for Nigerian crude. This has led the NUPRC to explore more efficient mechanisms for allocating and delivering domestic crude to refineries.

The implementation of the domestic crude oil swap arrangement could have significant implications for the pricing and availability of Nigerian crude oil for refineries. If successful, it could reduce supply costs, increase compliance with domestic crude supply obligations, and optimize existing logistics and supply networks. However, discussions on the proposal are still at an early stage, and all necessary modalities must be agreed upon before implementation. Lawyers and compliance officers should closely monitor the development of this initiative as it may impact the operations and compliance of refineries in Nigeria.

Lawyers and compliance officers should watch for the implementation of the domestic crude oil swap arrangement, which could impact the pricing and availability of Nigerian crude oil for refineries, potentially affecting their operations and compliance with regulations.

Source: Original reporting via NUPRC plans crude swap to boost refinery supply