Nigeria, the largest oil producer in Africa, is planning to comply with new regulations that require the supply of 483,000 barrels per day to local refineries in the first half of 2024. The aim is to secure a stable supply of crude oil for the domestic refining industry.
The Domestic Crude Supply Obligation guidelines, recently published by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), outline that the Dangote oil refinery and at least three government-run refineries are expected to commence operations in 2024.
In particular, the 650,000-barrel-per-day Dangote refinery is slated to receive the largest allocation of 325,000 bpd, according to the NUPRC data. With projections indicating the operation of six refineries with a combined refining capacity of 864,500 bpd from 2024, oil producers will be mandated to supply slightly over half of the crude requirements.
Enacted in 2021, the Petroleum Industry Act introduced a stipulation for Nigerian oil producers to allocate a portion of their crude to domestic refineries, ensuring they do not face shortages of crude supplies. However, enforcement of this requirement has been pending until now.
The NUPRC emphasizes that the participating refineries will pay global market prices for the supplied crude. A total of 48 oil producers, including major companies like TotalEnergies, Chevron, Shell, and ExxonMobil, are expected to take part in the program. Production will primarily come from their joint venture operations with the Nigerian state oil firm, NNPC.
Gbenga Komolafe, CEO of NUPRC, informed Reuters that the regulator is now actively enforcing these regulations as Nigeria endeavors to commence its oil refining operations. Notably, Nigeria has announced plans to produce 1.8 million bpd of oil in the coming year, surpassing its OPEC quota of 1.5 million bpd.