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Business - Economy Updated: April 16, 2024

NUPRC orders oil producers to meet local supply demands before exporting

By TIMOTHY TIMILEHIN ENIETAN-MATTHEWS
April 16, 2024
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The Nigerian Upstream Regulatory Commission (NUPRC) has issued a new directive that oil producers in the country must sell crude to domestic refineries before attending to foreign demands.

According to a report by Bloomberg, under the regulations, all oil firms in the country will be obliged to supply crude to domestic refiners that cannot independently source supplies locally.

According to the NUPRC directive, producers are only entitled to export crude after meeting their domestic supply obligations.

The NUPRC will function as an intermediary between local refiners and producers in cases where a deal cannot be reached on crude supply, facilitating a purchase agreement on a willing buyer, willing seller model.

The regulator said it plans to implement the domestic crude oil supply obligation measure in the second half of the year.

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The volume that each refinery will need to take has not been determined yet, according to the publication.

“Local refiners in Africa’s largest crude producer have complained of being starved of feedstock by oil firms, which prefer exports to earn dollars and avoid the risk of holding a weakening local currency,” the publication said.

“In addition to the 650,000-barrels-a-day Dangote Refinery, there are at least five operational modular refineries in Nigeria producing diesel and kerosene as well as the state-owned Port Harcourt refinery that is also expected to come on stream this year.”

On January 30, it was reported that the Dangote refinery would import US crude, after receiving from the Nigeria National Petroleum Company (NNPC) Limited and Shell International Trading and Shipping Company Limited (STASCO).

The publication also reported Dangote refinery bought one supertanker of West Texas Intermediate (WTI) Midland from PetroChina for May 1-10 arrival.

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