By Progress Godfrey, Abuja
The Nigerian Upstream Petroleum Regulatory Commission, NUPRC on Tuesday, held a meeting with stakeholders from the oil and gas industry to review the challenges hampering the implementation of Domestic Crude Oil Supply Obligation (DCSO), under Section 109 (2) of the Petroleum Industry Act (PIA) 2021.
Addressing players from the Oil Producers Trade Section (OPTS), Crude Oil Refineries Owners Association of Nigeria (CORAN) and Independent Petroleum Producers Association (IPPA) in Abuja, the Chief Executive, Nigerian Upstream Petroleum Regulatory Commission, Engr. Gbenga Komolafe said the meeting became necessary due to complaints from oil producers and Dangote refineries of inability to factor in the provisions of the law while executing contractual agreements. This has resulted in some companies being reluctant to allocate a portion of their production to Domestic Refineries
Others were change in vessel nomination under 24 hours to laycan, inability to provide the required financial instrument/backing prior to loading, delay in Expected Time of Arrival 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.
According to Komolafe, the failure to meet local supply obligations has negatively impacted the 2024 oil production budgetary target of 1.78 million per day, which is a cause for worry, especially with more refineries expected to begin operations.
The Chief Executive regretted that despite being endowed with oil and gas resources, Nigeria, prior to the PIA era failed to develop the mid and downstream, which has made the country a net exporter of crude oil, and a net importer of petroleum products, a situation that has affected the nation’s economy. He said that the commission flagged off the provision of the PIA as part of efforts to reverse the trend and add value across all value chains in the industry.
He said that following the challenges recorded, a committee was set up to develop a template within 48 hours, which will serve as a rule of engagement that will govern the implementation of the DCSO, and also prescribe punishment for defaulters.
He said, “The stakeholders in the industry have agreed that oil is an international commodity and that the operations will be guided by international best practices. So as a commission, we set up a committee with the industry to come up with a template, in line with international best practices that will be deployed to help in the smooth implementation of this provision of the Petroleum Industry Act.
“That template will enable parties to understand when exactly to tender the notice of readiness for a vessel when a vessel is arriving. That template will tell you at what point the payment instrument should be put in place. We charge the committee to report back to my table by 28th of March, which means they have to report within 48 hours. So that tells you how critical the task is.
“The template will tell us clearly the role and obligations of both parties both the refiner and the operator. So if there should be any default, there will be consequences. remedial actions, especially because default occasions huge costs. So that template will tell us who has defaulted or what is the consequence of that default. So with that parties will be alive to their responsibilities rather than putting the Nation at risk in that respect.”