The Federal Government in a strategic move to enhance local refining capabilities, reduce the importation of petroleum products, and alleviate pressure on foreign exchange reserves, has imposed a ban on the export of crude oil designated for domestic refineries.
Previously, approximately 500,000 barrels of crude oil per day, which were supposed to be processed domestically, were being diverted to international markets for foreign exchange earnings. The Nigerian Upstream Petroleum Regulatory Commission (NUPRC), acting as the upstream sector regulator, announced that it will no longer grant export permits for crude oil cargoes intended for domestic use.
In a statement from Abuja, the NUPRC underscored that any alteration to the designation of these cargoes must now be approved directly by its chief executive. Engr. Gbenga Komolafe, in a letter dated February 2, 2025, stated, “Diverting crude oil meant for local refineries is a violation of the extant laws of the country.”
Recent discussions involving over 50 industry stakeholders highlighted ongoing issues with the Domestic Crude Supply Obligation (DCSO) policy. Refiners have accused producers of failing to supply crude as per agreements, pushing them to source feedstock internationally. On the other hand, producers have criticized refiners for not adhering to commercial and operational terms, leading to the exploration of alternative markets to avoid operational inefficiencies.
Despite these disagreements, both parties acknowledged the regulatory measures set by NUPRC for better policy implementation. Komolafe warned of strict enforcement moving forward, stating, “NUPRC would, henceforth, strictly enforce the policy regarding implementation and defaults by oil companies.”
The NUPRC has already introduced significant regulatory frameworks like the Production Curtailment and Domestic Crude Oil Supply Obligation Regulation 2023 and the DCSO procedure guide to ensure compliance.
This policy shift is also seen as supportive of the ‘Naira-for-Crude’ initiative, which aims to encourage local refineries to buy crude in naira and sell refined products within Nigeria, thereby bolstering the national currency and economy.
The government’s action, backed by Section 109 of the Petroleum Industry Act (PIA) 2021, is intended to secure energy supplies for the nation and enhance energy security.