NUPRC summons 52 oil companies on Nov 1, to enforce domestic crude oil supply obligation to feed refineries

Oredola Adeola

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has summoned 52 crude oil exploration and production (E&P) companies to ensure adequate and consistent supply of crude oil to the existing and emerging refineries in the country in furtherance of the enforcement of Section 109 of the Petroleum Industry Act (PIA) 2021 which stipulated penalties for violations and non-compliance to the provisions of the Act.

Olaide Shonola, NUPRC Head, Public Affairs and Corporate Communications, made this known in a statement released on Saturday.

According to the statement, the NUPRC has scheduled the meeting for November 1, 2023, with the E&P companies for the alignment of the domestic crude oil supply obligation, operator’s compliance status, and operator’s response to ensure an adequate and consistent supply of feedstock to operators.

It stated that the action is taken in line with the Commission’s mandate of ensuring crude oil supply to licensed refineries in Nigeria as enshrined in Section 109 (4) of the PIA.

The NUPRC Public Affairs and Corporate Communications also revealed that as of 27 October 2023, eleven (11) of the E&P have responded, awaiting confirmation from the remaining 42 operators.

EnergyDay gathered that the 52 E&P consist of owners of the country’s mature oilfields and offshore basins.

Shonola said, “Those that have so far responded are Dubri Oil Limited, Heirs Energies Limited, Waltersmith Petroman Oil Limited, Midwestern Oil & Gas Company Limited, Frontier Oil Limited, Mobil Producing Nigeria Limited, All Grace Energy Limited, Green Energy International Limited, Enageed Resources Limited, and Pillar Oil Limited.”

She further emphasised the commitment of the Commission to apply all required penalties for default and has noted that a company that fails to respond to the Request for Quotation (RFQ) within the specified period is liable to pay an administrative fine of $10,000, while a company that has not complied with its DCSO, where the willing buyer(s) exist will not be granted an export permit.

She said, “A company that fails to comply with the DCSO would be made to pay a penalty of 50 percent of the Fiscal Price per barrel not delivered.

“The commission has already taken some steps in furtherance of this goal by developing and signing the Production Curtailment and Domestic Crude Oil Supply Obligation (PC&DCSO) Regulation 2023, in line with the provisions of Section 109(2) of the PIA 2021.

“Preparing for approval and implementation of the DCSO framework and procedure guide, processing of an application for refinery feedstock approval, requesting all oil producing companies to provide information on their planned crude oil off-take and existing sales purchase agreement, and advising the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to furnish it with the domestic crude oil requirement of refineries in operation,” Shonola said.

She therefore affirmed that the Commission gazetted the PC&DCSO Regulations, in pursuance to Section 109(2) of the PIA, to provide clarity on the obligations of the stakeholders.

“The law stipulates that the supply of crude oil to the domestic market shall be on a “willing buyer and willing seller” basis and the NMDPRA shall report to the commission where there is inadequate supply to the refineries.”

She explained that the commission has a responsibility to publish on a biannual basis, the domestic crude refining requirements of operating refineries in Nigeria, as received from NMDPRA, in line with Section 109(3) of the PIA.

Where there is a reported crude supply shortage from the Authority, she said the commission is under obligation to issue a Request for Quotation (RFQ) to producers asking for submission of quotation for bridging the shortfall, whereupon the commission will contact affected refineries to facilitate contract negotiations between the stakeholders.

“Failure to meet the terms will attract from the commission an obligation on the oil producers to supply the required volumes and notify the authority accordingly,” the statement noted.