The Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) has alleged that oil-producing companies have been diverting approximately 500,000 barrels of crude oil daily, which was originally meant for local refineries. The association commended the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) for banning the exportation of crude allocated for domestic refining, stating that this move would boost local refining capacity and reduce dependence on imported petroleum products.
In a statement released by PETROAN’s Publicity Secretary, Joseph Obele, the association criticized the longstanding practice of exporting crude meant for domestic use, describing it as a major racketeering scheme. According to Obele, producers and traders have prioritized earning quick foreign exchange over refining crude oil locally, leading to the neglect of local refineries.
“Approximately 500,000 barrels of crude oil per day are allocated for domestic refining, but these volumes often find their way to the international market,” Obele stated.
PETROAN’s National President, Billy Gillis-Harry, urged NUPRC to take swift action against companies that violate the policy. He stressed that ensuring the supply of crude to local refineries would improve fuel availability and conserve Nigeria’s foreign exchange reserves, which are often drained by importing refined petroleum products.
Last Monday, the NUPRC reaffirmed its commitment to stopping this diversion. In a letter dated February 2, 2025, addressed to oil exploration and production companies, as well as their equity partners, NUPRC’s Chief Executive, Engr. Gbenga Komolafe, warned that diverting crude oil meant for local refining is illegal under Nigerian law.
At a recent meeting attended by over 50 industry stakeholders, including refiners and producers, both parties accused each other of failing to uphold the Domestic Crude Supply Obligation (DCSO) policy. Refiners claimed that producers were not fulfilling their supply commitments and preferred selling their crude on the international market, forcing them to seek alternative feedstock. On the other hand, producers argued that refiners often failed to meet commercial and operational terms, making it necessary to sell their crude elsewhere to avoid operational losses.
In response, the NUPRC cautioned both parties against further breaches of the policy and urged refiners to adopt international best practices in procurement and operations. The Commission also reminded oil producers that they must obtain express permission from the regulator before selling crude outside the agreed framework.
Engr. Komolafe cited Section 109 of the Petroleum Industry Act (PIA) 2021, which mandates a stable supply of crude oil to domestic refineries to enhance Nigeria’s energy security. He warned that the NUPRC would now strictly enforce compliance with the policy, ensuring that oil companies adhere to the law and prioritize the development of local refining capacity.
With this latest regulatory intervention, stakeholders anticipate improved fuel availability and a reduction in Nigeria’s reliance on imported petroleum products.
