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Business News/ Economy / Nigeria to Compel Oil Firms to Sell Crude to Domestic Refineries
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Nigeria to Compel Oil Firms to Sell Crude to Domestic Refineries

Nigeria released new rules that will compel its oil producers to sell crude to domestic refineries in a bid to reverse the country’s reliance on imported refined products.

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(Bloomberg) -- Nigeria released new rules that will compel its oil producers to sell crude to domestic refineries in a bid to reverse the country’s reliance on imported refined products.

Under the regulations seen by Bloomberg News, all oil firms in the West African nation will be obliged to provide crude for domestic refiners that can’t independently source supplies locally. Producers are only entitled to export crude after meeting their domestic supply obligations, according to the Nigerian Upstream Regulatory Commission’s measures, which may see the new, giant Dangote Refinery getting more of its crude locally.

Read more: Oil Firms Balk at Nigeria’s Push to Sell Crude in Local Currency

Local refiners in Africa’s largest crude producer have complained of being starved of feedstock by oil firms, which prefer exports to earn dollars and avoid the risk of holding a weakening local currency. In addition to the 650,000-barrels-a-day Dangote Refinery, there are at least five operational modular refineries in Nigeria producing diesel and kerosene as well as the state-owned Port Harcourt refinery that is also expected to come on stream this year.  

The Dangote Refinery has recently been importing US crude after getting its initial supplies from the Nigerian National Petroleum Development Co. Ltd. It recently bought one supertanker of WTI Midland from PetroChina for May 1-10 arrival, traders with knowledge of the matter said.

The NUPRC will act as an intermediary between local refiners and producers where a deal can’t be reached on crude supply and facilitate a sales purchase agreement on a willing-buyer, willing-seller basis. Payments for crude to domestic refiners can be in dollars or naira or both, according the regulations.

The regulator said it aims to start the Domestic Crude Oil Supply Obligation measure in the second half of the year. The volume that each refinery will need to take hasn’t been set yet. 

--With assistance from Bill Lehane.

More stories like this are available on bloomberg.com

©2024 Bloomberg L.P.

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Published: 15 Apr 2024, 11:02 PM IST
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