The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has issued a warning to oil companies, mandating compliance with the Domestic Crude Supply Obligation (DCSO) or risk losing export permits.
This directive comes as Nigeria seeks to strengthen its energy security and maximize local refining capacity amid growing concerns over crude oil supply shortages.
In a letter dated February 2, NUPRC’s Chief Executive, Engr. Gbenga Komolafe stressed that companies must obtain express approval before diverting crude meant for local refineries. This move is expected to disrupt the long-standing practice of prioritizing international markets over domestic needs, which has often left local refineries struggling to secure feedstock.
At a recent stakeholders’ meeting, tensions flared as producers and refiners traded blame over lapses in the DCSO policy implementation. Refiners accused oil producers of bypassing local agreements to sell crude at higher international prices, leaving them scrambling for alternative supply sources.
On the other hand, producers argued that some refiners failed to meet agreed commercial and operational terms, making external sales a necessity.
In response, Komolafe cited Section 109 of the Petroleum Industry Act (PIA) 2021, reinforcing the commission’s commitment to stabilizing domestic crude supply.
The NUPRC has introduced regulatory measures, including the Production Curtailment and Domestic Crude Oil Supply Obligation Regulation 2023, to ensure compliance.
Beyond enforcing supply discipline, the commission is also pushing for greater transparency in pricing and contractual agreements between oil firms and local refiners. The new framework aims to remove bottlenecks that have historically hindered the smooth implementation of the DCSO policy.
Experts believe this move could have far-reaching economic and security benefits. A steady supply of crude to domestic refineries will not only boost fuel availability and reduce dependence on imports but also create more jobs in Nigeria’s energy sector.
Additionally, plugging loopholes in crude allocation could help curb illegal oil exports and pipeline vandalism.
However, some industry analysts warn that aggressive enforcement without addressing refinery capacity limitations and financial constraints could lead to unintended consequences, such as production shutdowns or disputes between regulators and oil firms.
With the Dangote Refinery and other modular refineries gradually coming online, the success of NUPRC’s policy will depend on how well it balances enforcement with incentives for both refiners and producers.
As the global oil market fluctuates, ensuring a sustainable domestic crude supply remains a strategic necessity for Nigeria’s energy future.
This latest directive signals that the era of lax enforcement is over, and all industry players must now align with Nigeria’s broader vision for energy self-sufficiency. Whether this marks a turning point or merely another regulatory cycle will depend on how well both the government and private sector navigate the challenges ahead.
(Agency Report)
