Good News for Dangote Refinery as Regulator Strikes Deal on New Pricing Model on Crude Supply
- Domestic oil refiners are now required by the NUPRC to provide a monthly price quote for crude supply
- Producers and the commission have come to an agreement for the sale of crude to local refiners at market rates
- The NUPRC head said it is the regulator's responsibility to strike a balance between upstream development and domestic supply
Legit.ng journalist Zainab Iwayemi has over 3-year-experience covering the Economy, Technology, and Capital Market.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has ordered domestic oil refiners to submit a monthly price quote for crude supply.
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In addition, the commission has reached an agreement with producers to permit sales of crude to domestic refiners at market prices, resolving a supply dispute that had soured relations with foreign oil companies.
To effectively monitor and regulate parties' transactions, the NUPRC instructed producers and refiners to furnish the commission with cargo price quotes on oil supply and delivery.
This decision was taken by the NUPRC during a meeting with the crude producers, which was organised by the Lagos Chamber of Commerce and Industry's oil producers trade section.
In a statement, NUPRC head, Gbenga Komolafe, said the meeting resolved to accept a framework that would be advantageous to all parties in order to prevent local refineries from being choked by off-the-curve prices.
New deal after Dangote Refinery's claims
The deal was reached in response to Dangote Refinery's allegations that oil majors were impeding local crude purchases by claiming they were out of supplies or by requiring exorbitant fees.
In a statement, NUPRC emphasised that pricing could not be a barrier to local refining.
Komolafe added in the statement:
“We will never allow price str*ngulation to disincentivise our domestic refining capacity optimisation.”
The NUPRC head said while he does not support any loss-making in the oil industry, the regulator would seek to prevent "crude supply profiteering."
Komolafe said it is the regulator's responsibility to strike a balance between upstream development and a sustainable domestic energy supply chain.
Monthly cargo price quotes
To maintain transparency, Komolafe demanded monthly cargo price quotes on crude oil supply and delivery from both producers and refiners.
He expressed the need for a rule of engagement to ensure that the pricing model used by oil producers does not hinder domestic refineries.
The regulator stressed that it does not support cost under-recovery in the upstream sector and that it will continue to work to ensure that crude supply profiteering as a negative factor that can str*ngulate domestic refining capacity optimisation is disallowed.
FG gives order to oil companies
Legit.ng also reported that the NUPRC stated it would mandate foreign oil corporations to provide crude oil to the Dangote oil refinery.
Olaide Shonola, the NUPRC spokesperson, stated that the commission was stepping in to guarantee that domestic crude sales to Dangote and other refineries would continue.
Shonola made this statement in response to the Dangote Group chairman's assertion that foreign oil corporations were unwilling to supply the refinery with crude.
Proofreading by James Ojo Adakole, journalist and copy editor at Legit.ng.
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Source: Legit.ng
