Dangote Refinery Sets New Production Date as FG Cracks Down on Oil Firms Over Lack of Crude Supplies
- The Nigerian government has threatened severe penalties on oil firms that fail to supply crude to local refineries
- The Nigerian Upstream Petroleum Regulatory Commission said oil firms must supply crude to local refineries
- The moves come as Dangote Refinery has reportedly set a December date to begin production
PAY ATTENTION: Unlock the best of Legit.ng on Pinterest! Subscribe now and get your daily inspiration!
Pascal Oparada has over a decade of experience covering Tech, Energy, Stocks, Investments, and Economy.
The Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe, has that the Commission had received a request from Dangote Refinery to guarantee the supply of 650,000 barrels of crude oil per day ahead of its expected coming onstream in December.
The Commission also mandated oil companies to ensure that local refineries, including the newly commissioned 650,000-capacity Dangote Refinery, have enough feedstock.
Source: Getty Images
FG to impose $10,000 fine on defaulting oil companies
PAY ATTENTION: Donate to Legit Charity on Patreon. Your support matters!
The federal government has also threatened a $10,000 fine and license revocation on any oil company that violates the law.
The Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe, said the oil firms needed to supply enough crude to local refineries on a willing buyer, willing seller model.
Vanguard reports that the NUPRC boss said that as Africa’s largest oil producer and seventh-biggest oil-producing country globally, Nigeria can no longer be a net importer of refined petroleum products.
He asked the oil producers to make available the volume of crude required for local refineries to function optimally, stating that supplying the domestic market is now a top priority project.
According to him, the industry’s failure to meet its obligations negatively impacted the economy.
He said:
“Domestic crude oil supply obligation refers to the requirements imposed by the government on oil producers to allocate a certain portion of their crude oil production for domestic consumption. This ensures a stable and reliable supply of crude oil for the country’s domestic needs, including refining to petroleum products.”
Dangote refinery, five others fail to take off due to lack of crude
Legit.ng earlier reported that the Dangote Refinery and other new modular refineries in Nigeria could not begin production due to the lack of crude.
The situation resulted in Dangote importing crude to meet its refining needs.
Analysts have said the primary reason the Lekki-based refinery skipped yet another production date initially set for October was a lack of feedstock.
“The volume of crude oil that oil producing companies shall dedicate to the domestic crude supply obligation shall be based on an allocation system determined by the Commission,” Komolafe stated
He said that the Commission should enforce the penalties in line with the law for non-compliance.
A company that has yet to comply with its domestic crude supply obligation, where a willing buyer insists, shall not be granted an export permit for the lease there. A company that fails to comply with the domestic supply obligation shall incur a penalty of 50 per cent of the fiscal price for barrels not delivered.
FG Moves to force oil firms to supply crude to Dangote, other refineries
Legit.ng reported that the Nigerian Upstream Petroleum Regulatory Commission (NURPC) said on Saturday, October 28, 2023, that it would take all the required steps within the Petroleum Industry Act 2021 to ensure enough and regular supply of crude oil to upcoming refineries in Nigeria.
The Commission summoned a meeting with 52 crude oil exploration and production companies to ensure the ramping up of feedstock for new refineries in Nigeria.
The Commission’s Head of Public Affairs and Corporate Communications, Olaide Shonola, warned in a statement that there would be consequences for undermining the process.
Source: Legit.ng
