The Federal Government in a bid to shore up local crude oil refining, has urged oil producers to prioritise supplying crude oil to domestic refineries as against exports. This is as Nigeria spent $74.6 billion on petrol exports from 2006 to 2021.
Gbenga Komolafe, the chief executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), disclosed this during a meeting with oil producers in Abuja on Wednesday.
According to him, Nigeria, despite its huge oil reserve, has remained a net importer of refined crude oil produce and a net exporter of crude oil.
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He explained that the inability to meet domestic refining obligations has impacted negatively on the state of the nation’s economy.
“We all understand that if we can meet our refining obligation, we will be able to impact largely on our economy and the attendant cost of pricing the refined product.
“So it behoves us to make Nigeria the net exporter of refined product and that is the issue we are gathered here to address. The PIA has a provision that has become part of the mandate of the commission to address, and that is the domestic crude oil obligation as enshrined in the PIA,” he said.
Accordingly to him, the domestic crude oil supply obligation refers to the requirement imposed by the government on oil producers to allocate a certain portion of crude oil production for domestic consumption.
This, he explained is aimed to ensure a reliable and stable supply of crude oil for the country’s domestic needs, including refined petroleum products.
“Section 109 of PIA introduces the domestic crude oil supply obligation in the oil industry in a bid to ensure crude oil supply to local refineries.
“The PIA stipulates that the supplier of crude oil to the domestic market shall be on a willing buyer and willing supplier basis, as the Nigeria mainstream and downstream petroleum regulatory agency shall report to the commission where there is inadequate supply of crude oil to the refineries.
“This is a matter of importance to us as a nation, we have reached a point where we need value addition to our crude, we cannot be exporting crude without adding value to it and that is the intent of the PIA, and as a responsible regulator, we have to enforce that.
“So our appeal is to you all as producers to collaborate with us in the interest of our nation because if we develop our mainstream, that is where value lies especially with the momentum in energy transition, so we need to develop our mainstream given the multiplier effect and benefits of developing our mainstream.
“So it is going to be a matter of national shame if we can not meet our domestic obligation to step up domestic refining capacity. So this is the issue.
“Good enough, we have the largest refinery in Africa, and that is the Dangote refinery. It is ready to start operation, we have received a request from the company to guarantee feedstock to the refinery, and we believe as a nation it will be a shame if we can not meet up the feedstock,” he said.
ask oil producers to prioritise domestic crude oil obligation over export
Speaking further, Komolafe said that the commission shall take all necessary steps required to ensure an adequate supply of crude oil to domestic refineries. He said that any company that fails to respond to the request for crude products will be liable to pay a $10,000 administrative fine.
“A company that does not comply with domestic crude obligations where a willing buyer exists shall not be granted an export permit for the export of crude oil. He shall incur a penalty of 50 per cent of the fiscal price per barrel nor delivered, payable to the commission.
“What we are trying to do is to begin enforcement of this critical provision of the PIA, and for us, it is another milestone in the implementation of the Act. it is important for us to begin to develop our mainstream sector of the industry,” he added.
In his remarks, Ogbonnaya Orji, the executive secretary of Nigeria’s Extractive Industries Transparency Initiative, stressed the need for more collaboration to strengthen local crude oil production.
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According to him, Nigeria spent $74.6 billion on the importation of refined crude oil from 2006 to 2021. “It is sad for a country that produces crude oil, so we share in the commission optimism and expectation that the local refineries are coming up to production.
“Our collaboration with the commission is defined by our interest in transparency and value for money. And the fact that between 2006 and 2021 we have spent $74.6 billion in 15 years on importation of PMS.
” We encourage more dialogue, engagement, constructive debate and engagement that allows free flow of information and clarification.
“My appeal is to continue to work with the regulators, they should not be seen as enemies but partners. We need engagements which I think will be nice to clarify issues that may have risen from our 2021 industry report,” he said.
