A supply conflict that had damaged ties with foreign oil corporations has been resolved by an agreement reached by Nigeria’s oil regulator with producers to enable sales of crude to domestic refiners at market pricing.
Nigeria’s insufficient refining capacity means that it must import the majority of its petroleum, but a 650,000 barrel-per-day refinery constructed by the richest man in Africa, Aliko Dangote, and put into service in February should make the country exportable.
A deal was reached on Wednesday in response to the Dangote Refinery’s allegations that oil majors were impeding local crude purchases by claiming they were out of supplies or by requiring exorbitant fees.
In a statement, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), the regulatory body, stated that it could not permit prices to obstruct domestic refining.
After meeting with oil businesses affiliated with the Oil Producers Trade Section (OPTS), Gbenga Komolafe, the chief of NUPRC, declared,
“We will never allow price strangulation to disincentive our domestic refining capacity optimization.”
While he did not support any loss-making in the oil industry, he did state that the regulator would seek to ensure that there was no “crude supply profiteering.”
To maintain transparency, Komolafe asked producers and refiners for monthly cargo price quotes on the supply and delivery of crude oil.
The regulator was tasked with striking a balance between upstream development and a sustainable domestic energy supply chain.
Laptops 1000To address the issue of refineries not having access to locally produced crude oil, the head of NUPRC met with producers and refiners in March.
