Nigeria has made a strong move to ensure that oil producers meet their domestic supply obligations by blocking oil export permits for companies that fail to send enough crude to local refineries. This includes the Dangote Refinery, the largest in Africa.
The country’s Petroleum Industry Act (PIA) requires oil producers, both local and international companies, to supply a certain amount of crude oil to Nigerian refineries before exporting. This is part of an effort to boost local refining capacity. However, many oil producers have been reluctant to comply, claiming that local refiners are offering uncompetitive prices for the crude, making it more profitable to export the oil instead.
In response to this issue, the Dangote Refinery urged Nigeria’s oil regulator to take action and enforce the law. On Monday, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) issued a reminder to oil producers about their obligations, and the penalties they could face for non-compliance. The NUPRC’s head, Gbenga Komolafe, pointed out that companies that divert crude designated for domestic refineries to export markets would no longer receive export permits.
During a recent meeting between oil producers and refiners, both sides blamed each other for the situation. Refiners accused producers of not meeting their obligations, while producers argued that the low prices offered by refiners were forcing them to look for better deals elsewhere.
Komolafe made it clear that this practice of diverting crude meant for local refineries is against the law. Moving forward, the regulator will block the export of such crude shipments.
For the first half of 2025, Nigerian refineries will need 770,500 barrels of crude per day. The Dangote Refinery alone is expected to require 550,000 barrels per day, according to a schedule released by the oil regulator.
This move by the Nigerian government shows its commitment to strengthening its domestic refining industry, ensuring local refineries have enough crude to process and contribute to the country’s oil needs.
