FG moves to resolve crude oil supply issues to refineries
In a significant move to bolster Nigeria’s domestic refining capacity, the Federal Government has established a special committee to address ongoing issues that have hindered the Oil Producers Trade Section (OPTS) and the Independent Petroleum Producers Group (IPPG) from supplying crude oil to local refineries, including the highly anticipated Dangote Refinery.
During a high-level meeting held in Abuja, Senator Heineken Lokpobri, the Minister of State for Petroleum Resources (Oil), announced the formation of the committee, which is led by the Permanent Secretary, Ambassador Nicholas Ela. The committee is tasked with resolving misunderstandings and is expected to present its findings and recommendations by Tuesday.
The meeting, which brought together key stakeholders in the Nigerian oil sector, aimed to clear up confusion surrounding the Nigerian Upstream Petroleum Regulatory Commission (NUPRC)’s policy on Crude Oil Supply Obligation. This policy, as outlined in Section 109(2) of the Petroleum Industry Act (PIA), mandates that oil companies supply a portion of their crude oil production to domestic refineries to support local refining efforts.
Senator Lokpobri emphasized the importance of the discussions, stating, “The reason why we are gathered here today is to address a very important issue in the oil industry. There seems to be some misunderstanding of the regulation made by NUPRC that pertains to domestic crude oil supply obligations by oil companies. As part of our policy here in the ministry, whenever there is a seeming misunderstanding, we bring parties together with a view to resolving whatever issues there might be.”
The meeting included representatives from both international oil companies (IOCs) under the OPTS and indigenous oil companies under the IPPG. Despite a few unresolved points, significant progress was made in clarifying and aligning the expectations and responsibilities of all parties involved.
Senator Lokpobri reiterated the government’s commitment to supporting local refining capacities and creating a globally competitive environment for the oil and gas sector in Nigeria. “We want to make it clear that we are committed to supporting local refining. We are also committed to ensuring that we create an environment that is globally competitive, allowing operations in the oil and gas sector to continue thriving. This has been a major policy thrust since our appointment, ensuring that wherever there are issues, we sit down and resolve them,” he said.
He further reassured the press and the public that there is no significant disagreement among stakeholders regarding the domestic crude oil supply obligation. “Please report to Nigerians that there is no disagreement. The issues that people thought were very fundamental have all been agreed upon, and all of us are committed. All the companies in Nigeria are committed to ensuring that we meet that part of the PIA that pertains to the domestic crude oil supply obligation.”
The newly formed committee, headed by Permanent Secretary Ambassador Nicholas Ela, will specifically focus on the unresolved issues that have arisen from the implementation of the NUPRC’s Crude Oil Supply Obligation policy. The committee is expected to work quickly, reviewing the policy details and the concerns raised by both OPTS and IPPG members, and report back to Senator Lokpobri by Tuesday.
“The committee will look at the matter between Monday and Tuesday and report back to me,” Lokpobri stated, indicating the urgency and importance of resolving these issues promptly.
The meeting in Abuja saw the attendance of several key industry stakeholders, reflecting the broad support and interest in resolving these critical issues. Notable attendees included Professor Anthony Adegulugbe, Chief Executive Officer of Green Energy International Limited; Mr. Roger Brown of Seplat Energy Plc; Mr. Austin Avuru, Chairman of AA Holdings & EVC Platform Petroleum; and Mr. Oyeleke Banmeke, Executive Coordinator of the IPPG Secretariat.
These industry leaders expressed their support for the government’s initiative and commitment to finding a sustainable solution that benefits all parties and enhances Nigeria’s capacity for local refining.
The Minister of State for Petroleum Resources (Oil) also emphasized that the government’s ultimate goal is the sustainability and growth of Nigeria’s oil industry. “Since the sustainability of the industry’s growth is the policy thrust of the government, we have always brought parties together to resolve nagging issues. The issues that have been resolved were ones people considered irreconcilable in the industry,” he noted.
He stressed that the government remains dedicated to creating a favorable environment for all stakeholders, ensuring that the oil sector continues to grow and contribute significantly to Nigeria’s economy. The resolution of the crude oil supply issues is a critical step in achieving this objective.
As Nigeria continues to work towards enhancing its domestic refining capabilities and reducing its dependence on imported refined products, the resolution of the crude oil supply issues is a significant step forward. The government’s proactive approach in setting up a committee to address these challenges demonstrates its commitment to fostering a more sustainable and self-reliant oil sector.
With the expected completion of the Dangote Refinery and other local refineries in the pipeline, ensuring a steady and reliable supply of crude oil is crucial. The government’s efforts to engage with both international and indigenous oil producers reflect a holistic approach to addressing these challenges and ensuring that Nigeria’s oil sector remains competitive and resilient in the face of global economic shifts.
The formation of this committee and the collaborative approach taken by the Federal Government signify a positive step towards resolving longstanding issues in the oil sector. By bringing together key stakeholders and addressing concerns through dialogue and cooperation, the government is laying the groundwork for a more robust and efficient oil industry that can support Nigeria’s economic growth and development.
As the committee works towards its Tuesday deadline, all eyes will be on the outcome of its deliberations and the potential impact on Nigeria’s oil industry and economy. With a focus on transparency, competitiveness, and sustainability, Nigeria is poised to strengthen its position as a leader in the global oil and gas sector.
