January 5, 2024 [Pumps Africa]- The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has set up a new regulation that mandates oil producers in Nigeria to supply approximately 483,000 barrels per day (bpd) of crude oil to local refineries for the first six months of 2024.

This regulation is part of the broader efforts to enhance the country’s downstream sector, boost refined petroleum product production, and meet the growing fuel demand using domestic resources.

The directive is also in line with the provisions of the Petroleum Industry Act (PIA) enacted in 2021. The PIA requires oil producers in Nigeria to allocate a portion of their crude oil to domestic refineries to ensure a stable supply for domestic refining.

Strategy

Nigeria is undergoing significant expansion in its downstream sector, with the construction of six new refineries. The notable ones include the Dangote Refinery (650,000 bpd capacity), Port Harcourt, Warri, and Kaduna refineries.

The Dangote Refinery is expected to receive a majority share of crude oil from local producers, with a volume of 325,000 bpd. Other refineries, such as Waltersmith, OPAC, Niger Delta Petroleum Refinery, as well as government-run refineries like Warri and Port Harcourt, will also receive allocated amounts based on their refining capacities. This ensures fair remuneration for the producers contributing to the domestic refining efforts.

Nigeria has been working towards reducing its dependence on imported petroleum products and lowering fuel prices after the removal of the fuel subsidy in June. The government aims to end the importation of petroleum products and keep prices relatively low despite an initial spike of over 200% in fuel prices post-subsidy removal.

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