The Nigeria Upstream Petroleum Regulatory Council (NUPRC) has directed local oil producers to deliver approximately 483,000 barrels per day (bpd) of crude oil to domestic refineries during the first half of 2024. These instructions are outlined in the newly released Domestic Crude Supply Obligation (DCSO) guidelines by the Commission, aiming to secure a consistent supply for domestic refining in Nigeria,leadership reports.
In line with this initiative, several local refineries, including the Dangote Oil Refinery and at least three government-run facilities, are anticipated to commence operations in 2024. As per the updated DCSO, the 650,000-barrel-per-day Dangote Refinery is poised to receive the largest share, amounting to 325,000 bpd.
Data from the NUPRC indicates that a total of six refineries, collectively possessing a refining capacity of 864,500 bpd, are expected to become operational starting in 2024. Consequently, oil producers are mandated to supply slightly more than half of the crude requirements to meet these refining capacities.
The Petroleum Industry Act of 2021 introduced a provision requiring Nigerian oil producers to allocate a portion of their crude to domestic refineries, preventing them from facing shortages. Despite the enactment of this regulation, its enforcement has not been implemented thus far.
A total of 48 oil producers, including major companies such as TotalEnergies, Chevron, Shell, and ExxonMobil, are set to participate in this program. Production is expected to primarily come from their joint venture operations with the Nigerian state oil firm, NNPC.
Gbenga Komolafe, the CEO of NUPRC, stated to Reuters that the regulator is now actively enforcing these regulations as Nigeria aims to initiate its oil refining processes.
Nigeria, after removing the fuel subsidy in June, has been striving to end petroleum product imports and maintain relatively low prices. The country plans to produce 1.8 million bpd of oil in the upcoming year, surpassing its OPEC quota of 1.5 million bpd.
Other refineries, including Warri and Port-Harcourt, are expected to benefit from the crude oil supply, with anticipated daily allocations of 75,000 and 54,000 barrels, respectively. Additionally, refineries like Waltersmith, OPAC, and Niger Delta Petroleum Refinery are set to receive 10,000 bpd and below.
Although the Dangote refinery was commissioned in May, it has not yet commenced refining operations, even after receiving crude earlier this month. The turnaround maintenance of the old Port-Harcourt refinery has been completed, and it is scheduled to begin refining 60,000 barrels of oil daily from January 2024.