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Oil producers under the aegis of the Independent Petroleum Producers Group (IPPG) have called on the Nigerian National Petroleum Company Limited (NNPCL) to re-direct its allocated crude oil volumes to Dangote Petrochemical Refinery and other local refineries to mitigate the current crude supply shortage being experienced by the local refiners that is impacting local product availability in many parts of Nigeria.
The Chairman of IPPG, Abdulrazak Isa, said on August 16 August 2024, in a letter to the Chief Executive Officer, Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Engr. Gbenga Komolafe, that the NNPCL should utilise its allocated four hundred and forty-five thousand barrels of oil per day (445kbopd) intervention crude oil volume to salvage the current situation, as it had done in many instances in the past.
While affirming the group’s commitment to enhancing the efficiency of the petroleum value chain within the Nigerian economy, Isa said some IPPG members already owned or were supplying crude oil to local refineries but insisted that the NNPCL was in a good position to mitigate the current crude supply shortfall faced by local refiners by leveraging its statutory crude allocation for meeting local domestic consumption.
“Historically, NNPC has always had an intervention crude oil volume (445 kbopd) meant to satisfy the nation’s domestic consumption. This volume has always been used, under various swap mechanisms, to import refined products for domestic consumption. Since there is now domestic refining capacity to meet consumption, this dedicated volume should be reserved for all domestic refineries under a price hedge mechanism that can be provided by a suitable financial institution such as Afrexim Bank,’’ he stated.
Isa, however, maintained that “any national production above this allocated volume should be treated strictly as export volumes, adhering to the willing buyer, willing seller framework of the international market, especially since the refiners will need to export excess products that surpass domestic demand, thus boosting FX earnings.’’
The group also expressed concerns over certain recent developments, including the domestic crude oil refining requirements and crude oil production forecast for the second half of 2024, announced by NUPRC, as well as the request to all producing companies for their monthly quotations for crude oil supply to licenced refineries in Nigeria.
Specifically, IPPG said some of its members had received letters from the Dangote Refinery for crude supply nominations for the month of October and faulted the approach as bringing them under an obligation, saying it was in conflict with the spirit of the willing-buyer, willing-seller framework prescribed by the Petroleum Industry Act (PIA 2021).
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