The Nigerian Upstream Petroleum Regulatory Commission has highlighted the challenges faced by Dangote refinery and other local crude oil refining facilities in the country due to a lack of feedstock.
To address this issue, the NUPRC Chief Executive, Gbenga Komolafe, has directed the enforcement committee to create a template for the seamless implementation of the Domestic Crude Oil Supply Obligation by Friday.
A statement released on Wednesday indicated that Komolafe issued this directive during a meeting to review the DCSO as outlined in the Petroleum Industry Act 2021, with a focus on regulating and enforcing crude supply matters.
Emphasizing the importance of prioritizing feedstock supply to local refineries and resolving complaints from oil producers and Dangote Refinery within the specified timeframe, Komolafe reiterated the government’s commitment to transform Nigeria into a net exporter of refined petroleum products.
Identifying various challenges such as contractual agreement oversight, hesitancy of some companies to allocate production to domestic refineries, changes in vessel nominations, delays in vessel arrivals, and frequent alterations in laycans for crude oil designated for local refineries, Komolafe underscored the necessity of adhering to legal provisions and enhancing domestic refining capacity.
Refinery owners, expressing concerns about insufficient crude oil supply in recent years, urged the government to address payment currency issues for supplied crude oil, noting that meeting refinery demands would require increased investments to enhance production capacity.
Representatives from the Oil Producers Trade Section and Independent Petroleum Producers Group echoed the urgent need for the government to tackle industry challenges during the meeting.
With the revelation that oil production in 2024 fell below the budgeted target of 1.78 million barrels per day, concerns have arisen regarding the supply of feedstock to local refineries, especially with several new refineries expected to commence operations.
The Government-owned Port Harcourt refinery is set to begin operations in April, as announced by Mele Kyari, the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited.
Earlier statements from the Minister of State Petroleum Resources (Oil), Heineken Lokpobiri, emphasized the need for increased production and investments in the oil sector to meet the refineries’ feedstock requirements.
As of February 2024, Nigeria’s daily oil production stands at approximately 1.4 million barrels per day amidst challenges such as oil theft and vandalism within the sector.
While the Dangote refinery announced the commencement of diesel and aviation fuel production in January, these products are yet to be available in the market.