NUPRC moves to crude swap scheme to boost refinery supply

The Nigerian Upstream Petroleum Regulatory Commission has begun consultations with oil industry stakeholders on a proposed domestic crude oil and gas swap arrangement aimed at reducing supply costs and improving crude availability for local refineries.

The initiative is expected to strengthen compliance with the Domestic Crude Supply Obligation and Domestic Gas Supply Obligation while eliminating unnecessary movement of crude across long distances.

The NUPRC Chief Executive, Oritsemeyiwa Eyesan, disclosed this during a courtesy visit to the Nigerian Midstream and Downstream Petroleum Regulatory Authority in Abuja.

In a statement issued by the commission’s Head of Media and Corporate Communications, Eniola Akinkuotu, on Friday, Eyesan said the proposed swap mechanism would allow producers and refiners to make better use of existing logistics and supply networks.

She said the commission was consulting industry stakeholders to develop the framework for the arrangement, which would also involve the Gas Aggregation Company Nigeria Limited.

According to Eyesan, the arrangement would allow producers located near export facilities to meet the domestic supply obligations of producers located closer to local refineries, thereby avoiding unnecessary transportation costs.

She said, “The Nigerian Upstream Petroleum Regulatory Commission is consulting widely with stakeholders in the industry on the idea of a domestic crude oil and gas swap that would reduce cost and increase availability of products in the country.

“Once all the modalities are finalised, there would be improved compliance with the Domestic Crude Supply Obligation and the Domestic Gas Supply Obligation. How the swap works is that I have an obligation somewhere and I am close to an export facility. Somebody else has an obligation inland and his own (facility) is close to a domestic offtaker.

“So, instead of trying to move from one end to the other, we just agree on a swap arrangement, and there is a mechanism for them netting off.”

The proposal comes amid improved crude deliveries to domestic refineries. NUPRC data showed that local refiners received 53.7 million barrels of crude between April and June 2026, representing 97.4 per cent compliance with the DCSO in the second quarter.

Despite the improved supply, some Nigerian refineries continue to import crude to sustain their operations.

Domestic refiners have also complained that some producers sell crude to them at premium prices, making locally sourced crude more expensive than imported alternatives and affecting the competitiveness of domestic refining.

Eyesan said the continued reliance on imported crude made it necessary to explore more efficient ways of allocating and delivering Nigerian crude to domestic refineries.

She, however, stressed that the swap proposal remained at the consultation stage and would only be implemented after the necessary framework and modalities had been agreed.

The NUPRC chief also pledged closer collaboration with the NMDPRA to address challenges across the petroleum value chain.

Responding, the NMDPRA Chief Executive, Rabiu Abdullahi Umar, commended the NUPRC for improving enforcement of domestic crude supply to local refineries.

Umar, who also congratulated the commission on what he described as a seamless and credible 2025 licensing round, said domestic crude pricing remained critical to the sustainability of Nigeria’s refining industry.

He noted that although the Petroleum Industry Act provides for transactions on a willing-buyer, willing-seller basis, the price of crude remained a major factor in determining the viability of local refining.

The NMDPRA also backed the establishment of strategic petroleum reserves, saying they would strengthen energy security and contribute to price stability.

The proposed crude swap arrangement comes as Nigeria’s refining capacity expands, with the Dangote refinery and other private refineries increasing their operations.

Regulators are consequently under pressure to ensure that rising domestic refining capacity is matched by reliable and competitively priced crude supplies.