The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has expressed concerns over the non-compliance of oil-producing companies with the Domestic Crude Oil Supply Obligation (DCSO) as mandated by the Petroleum Industry Act (PIA) 109.
The DCSO requires oil producers to allocate a specified quantity of crude to local refining companies.
During a stakeholders’ engagement on the implementation of the DCSO on Tuesday, the NUPRC Chief Executive, Engr. Gbenga Komolafe, revealed that the commission has received unsatisfactory reports of DCSO non-compliance, which could adversely affect national budgetary targets.
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Komolafe highlighted several complaints received from within the commission, oil producers, and Dangote refinery.
They include: “Inability to factor in the provisions of the law while executing contractual agreements has resulted in some companies being reluctant to allocate a portion of their production to domestic refiners.
“Change in vessel nomination under 24 hours to the laycan. Inability to provide the required financial instrument/backing before loading.
“Delay in the expected time of travel of vessels resulting in production cut which is inimical to our national budgetary targets.
“Frequent Change in laycans for crude oil allocated to domestic refineries and delays at loading terminals after the arrival of the loading Vessel.”
To address these challenges, the NUPRC has established a committee comprising representatives from the commission, Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Nigerian National Petroleum Company Limited (NNPCL), Oil Producers Trade Section (OPTS), Independent Petroleum Producers Group (IPPG), and Dangote Petroleum Refinery.
Speaking on the focus of the inaugurated committee, Komolafe said, “We aim to identify and address these challenges effectively, with the ultimate goal of ensuring a seamless and efficient allocation process by the oil producers and offtake by the domestic refiners, in strict adherence to statutory requirements and operational best practices.”
As a regulator, Komolafe stressed that the commission’s priority is to uphold the integrity of the DCSO framework while fostering a conducive environment for the sustainable growth of Nigeria’s oil and gas industry.
The NUPRC boss reiterated the Commission’s commitment saying, “While it is natural to encounter challenges, particularly during the initial stages of implementing Domestic Crude Oil Supply Obligation (DCSO), I want to assure you that the Commission is closely monitoring all developments to safeguard against any adverse impacts on national production and to prevent any violations of the DCSO provisions.”