July 11, 2024

Nigeria’s oil regulator has struck a deal with producers to allow sales of crude to domestic refiners at market prices, ending a supply dispute that had strained relations with international oil companies.

Nigeria relies on imports for most of its fuel needs due to inadequate refining capacity, although a 650,000 barrel-a-day refinery built by Africa’s richest man Aliko Dangote and operational since February, should make it self-sufficient and able to export.

An agreement on Wednesday follows complaints from the Dangote Refinery that oil majors were hindering local crude purchases by demanding excessive premiums or saying they had no available supplies.

The regulator Nigerian Upstream Petroleum Regulatory Commission (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 ensure transparency, Komolafe requested monthly cargo price quotes on crude oil supply and delivery from both producers and refiners and said it was up to the regulator to balance upstream development with a sustainable domestic energy supply chain.

In March, the NUPRC chief met with oil producers and refiners to address refineries’ lack of access to locally produced crude oil.

REUTERS