Several oil producers in Nigeria resisted efforts by the Federal Government to mandate the supply of crude oil to local refineries, including the Dangote Refinery, according to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
In its latest report, the commission said that despite multiple meetings and new regulations introduced in September 2023, many companies failed to comply with the Domestic Crude Supply Obligation (DCSO). These companies submitted formal letters requesting waivers or explained why they could not meet their monthly crude supply quotas.
The resistance came from key industry groups, including the Independent Petroleum Producers Group (IPPG) and the Oil Producers Trade Section (OPTS), as well as individual producers and their equity partners.
To implement the DCSO policy, the NUPRC facilitated crude allocations to local refineries through the monthly production curtailment system. It also asked producers to submit all existing crude sale agreements to assess commitments that could affect domestic supply.
In March 2024, a joint committee was set up with representatives from NUPRC, NNPC Upstream, OPTS, IPPG and the Crude Oil Refinery Owners Association to create a workable framework for the policy. Allocation metrics were developed to reflect each producer’s capacity and were shared with eligible companies by July 31.
Producers able to produce more than 3,000 barrels per day were given their monthly crude obligations for the rest of the year. However, by August, NUPRC again received several letters requesting exemptions or raising concerns about the volume allocations.
Tensions also rose when oil producers objected to the participation of refiners in production curtailment meetings. This led the commission to suspend refiners’ attendance at those meetings from September 2024.
Despite the setbacks, the NUPRC said it continued to ensure crude supply to local refineries and received status updates from the Nigerian National Petroleum Company Limited (NNPC) regarding deliveries to the Dangote refinery.