The Federal Government has officially banned the export of crude oil allocated for domestic refineries. The policy, implemented through the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), seeks to curb the longstanding practice of diverting these crude allocations to the international market. This is a decisive move to enhance Nigeria’s refining capacity and reduce dependence on imported petroleum products.
For years now, approximately 500,000 barrels per day (bpd) of crude oil, originally designated for local refineries, have been illegally exported by producers and traders seeking quick foreign exchange profits. Therefore to put an end to this, the NUPRC has announced strict measures to ensure compliance.
In a letter dated February 2, 2025, addressed to exploration and production companies, the commission’s Chief Executive Officer, Engr. Gbenga Komolafe, warned that any changes to crude cargoes meant for domestic refining must receive express approval from the regulator. He emphasized that failure to comply would be considered a violation of the Petroleum Industry Act (PIA) 2021, particularly Section 109, which mandates a stable supply of crude to local refineries to strengthen Nigeria’s energy security.
The government’s move has exposed deep divisions between refiners and crude producers. At a recent industry meeting attended by over 50 key stakeholders, both sides blamed each other for the failure of the Domestic Crude Supply Obligation (DCSO) policy. Refiners accused producers of deliberately avoiding supply agreements, opting instead to sell crude to foreign buyers. On the other hand, Producers countered that refiners often failed to meet commercial and operational terms, forcing them to seek alternative markets to avoid losses.
Despite the tensions, both parties acknowledged that the NUPRC had now put in place clear guidelines for enforcing compliance with the law. The regulator has cautioned against any further breaches and urged refiners to adhere to international best practices in procurement and operations.
To ensure strict adherence to the new policy, NUPRC has implemented several regulatory actions, including: The signing of the Production Curtailment and Domestic Crude Oil Supply Obligation Regulation 2023; The development of a DCSO framework and procedure guide to streamline implementation; The denial of export permits for crude oil cargoes originally designated for local refining.
Komolafe assured that the commission would take regulatory action against any company found violating the directive. “We will enforce compliance to the fullest extent of the law. No crude oil meant for Nigeria’s refineries should be traded internationally without approval,” he stated.
This policy marks a significant shift in Nigeria’s oil sector, reflecting the government’s commitment to achieving energy self-sufficiency. While implementation challenges remain, including ensuring refiners can absorb the allocated crude, the long-term impact could reshape Nigeria’s petroleum landscape.
With the revamp of the country’s state-owned refineries and the commissioning of private refineries like the Dangote Refinery, experts believe this move could reduce fuel import bills, create jobs, and stabilize the naira. However, successful execution will depend on strict monitoring, cooperation between industry players, and the government’s ability to enforce compliance without disrupting crude production.
Read also: https://symfoninews.com/fg-to-begin-crude-oil-sales-in-naira-october/
