Nigeria’s oil regulator Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has reached an agreement with producers to allow crude sales to domestic refiners at market prices, resolving a supply conflict that had strained relations with international oil companies.
Nigeria imports the majority of its fuel due to insufficient refining capacity, although a 650,000 barrel-per-day refinery built by Africa’s richest man, Aliko Dangote, and active since February should make it self-sufficient and export-ready.
The deal was reached on Wednesday following accusations from the Dangote Refinery that oil majors were impeding local crude purchases by demanding exorbitant prices or claiming they had no available supplies.
NUPRC said in a statement it could not allow pricing to impede domestic refining.
“We will never allow price strangulation to disincentivise our domestic refining capacity optimisation,” NUPRC’s chief Gbenga Komolafe said following talks with oil companies grouped under the Oil Producers Trade Section (OPTS).
He said the regulator would work to ensure there was no “crude supply profiteering,” although he also said it did not condone any loss-making in oil production.
To maintain transparency, Komolafe requested monthly cargo price quotes for crude oil supply and delivery from both producers and refiners, stating that it was up to the regulator to strike a balance between upstream development and a sustainable domestic energy supply.
In March, the NUPRC chief met with oil producers and refiners to discuss the refineries’ lack of access to domestically produced crude oil.
The OPTS provided no immediate comment.
