In a decisive step to strengthen local refining capacity and reduce dependence on imported petroleum products, the Federal Government has prohibited the export of crude oil allocated for domestic refineries.
According to reports, the move is also aimed at easing pressure on Nigeria’s foreign exchange reserves.
For years, an estimated 500,000 barrels per day (bpd) of crude oil meant for local refining have been diverted to international markets as traders and producers sought to maximize foreign exchange gains.
Now, through the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), the government has declared that crude oil cargoes assigned for domestic refining will no longer receive export permits.
The NUPRC further stated that any modifications to these allocations must receive direct approval from its Chief Executive.
Government Moves to Prevent Diversion
In a letter dated February 2, 2025, addressed to exploration and production companies and their equity partners, NUPRC’s Chief Executive, Engr. Gbenga Komolafe, stressed that diverting crude oil intended for domestic use is a violation of existing laws.
At a recent industry meeting involving over 50 key stakeholders, refiners and producers blamed each other for irregularities in the implementation of the Domestic Crude Supply Obligation (DCSO) policy.
Refiners accused producers of failing to meet supply commitments, instead selling crude on the international market, which forced them to seek alternative sources of feedstock.
Meanwhile, producers argued that refiners often fail to meet commercial and operational requirements, leaving them with no choice but to explore alternative markets to avoid production disruptions.
Despite these disagreements, both sides acknowledged the need for stricter regulatory oversight.
The NUPRC has warned against further violations, urging refiners to adopt international best practices in procurement and operations. Producers were also reminded that any deviations from the DCSO policy must receive express approval from the regulatory body.
Citing Section 109 of the Petroleum Industry Act (PIA) 2021, Komolafe emphasized that the law guarantees a stable supply of crude oil to domestic refineries and safeguards Nigeria’s energy security.
He reiterated that the commission will strictly enforce compliance and take necessary regulatory action against violators.
To ensure adherence, the NUPRC has implemented several measures, including the signing of the Production Curtailment and Domestic Crude Oil Supply Obligation Regulation 2023 and the introduction of a procedural framework for its enforcement.
According to Vanguard, sources indicate that this directive aligns with the government’s Naira-for-Crude initiative, which ensures that domestic refineries receive crude oil in naira while refined products are sold in the local currency.
This initiative is expected to enhance the value of the naira while ensuring a more efficient supply of refined fuel for domestic consumption.
