The Nigerian Upstream Petroleum Regulatory Commission has revealed that 11 crude oil cargoes offered to local refiners in a single month went uncollected, despite persistent complaints from the refiners regarding a scarcity of crude supply.

byThe Chief Executive of NUPRC, Gbenga Komolafe, who was represented by commission official Boma Atiyegoba during a panel session at the Crude Oil Refinery-Owners Association of Nigeria summit in Lagos, presented this counter-claim.

Komolafe noted that while refiners have consistently expressed concern over the unavailability of feedstock for local processing, the commission’s records actually demonstrate that crude oil is being made available under the Domestic Crude Supply Obligation.

This disclosure comes as the 650,000-capacity Dangote Refinery has repeatedly lamented the insufficient crude supply to its plants, with officials saying the facility is increasingly relying on the United States for its feedstock.

Similarly, owners of crude modular refineries have continually complained about crude shortages, urging the Federal Government to enforce the domestic crude supply obligation as mandated by the Petroleum Industry Act.

Komolafe, however, disputed these claims, arguing that several reasons prevent refiners from accepting crude from oil producers each month. Citing April as a specific example, he stated that 48 cargoes were available for export, with 21 reserved for local refining, yet only 10 were ultimately lifted by refiners.

He elaborated on the figures: “I will use April to make a reference in terms of the DCSO and availability of crude to the refiners. If you look at our database, in April, we have about 48 cargoes that are available for Nigeria export. Of those 48 cargoes, 21 of them were reserved for DCSO. In the month of April, there were 48 crude cargoes; 21 of the cargoes were for DCSO, which amounts to 21 million barrels of oil. Of the 21 that were offered for DCSO, only 10 of them were taken; 11 of them did not fall through.”

Komolafe clarified that the reasons for the unclaimed cargoes were largely commercial and technical, not due to the oil being unavailable.

He stated, “That’s why we mention the issue of willing buyer, willing seller. It is a business; you go and discuss your pricing, and the commission has decided not to interfere in the commercial pricing of your business with the operators, because we don’t want to be seen to be fixing the prices. At the point of discussion, let the willing seller, willing buyer clause come in; and you know, crude oil is an international commodity, so there are a lot of factors and indices that go into the pricing.”

He further disclosed that eight of the cargoes were rejected due to pricing disputes, and three due to refiners’ preference for specific crude grades. Komolafe reiterated, “We have 11 cargoes that were not taken. Out of those 11, eight of them were as a result of pricing differences, while about three of them were as a result of specifications. I can tell you that the refiners also conduct what they call refining economics, and they have preferred blends in their minds that give them yields of a particular product. Even if the government makes this product available, if they don’t need that particular grade, they will not go to buy it, but that does not mean the government is not making that product available. So, in April, 21 cargoes were offered, and 10 were taken; eight of them were not taken for price discrepancies, and three were not taken due to specification. The commission is making these products available.”

Also participating in the panel session, the Executive Secretary of the African Refiners and Distributors Association, Anibor Kragha, advised that Nigeria’s refinery operators should expand the range of crude blends they can process to improve domestic refining performance. He suggested the country needs to produce more to meet its OPEC quota and advised having enough crude for both export and local refining.

Kragha stated, “Our refiners are spoilt in that, they only process one or two blends of crude. You should actually have a crude slate that your refinery can take. I know that requires a lot of money, but that’s the way to go, because ultimately, the goal is for Nigeria to get technical allowables to maximise production. Fight for your OPEC quota, but also try to increase production and refine domestically as much as you can and export as much as you can.”

However, the Vice-Chairman of CORAN, Mrs. Dolapo Okulaja, contested the NUPRC’s position, arguing that most local refiners are not receiving enough crude to operate efficiently despite the PIA’s legal provisions.

She demanded clarity, asking, “We need clarity as to how much we will be getting in crude oil because there seems to be an imbalance between what we are producing and what we want to give for local refining. What are you doing about giving local refineries the amount of crude that they need to be operational? I cannot set up a 20,000-barrel refinery, and I’m only getting 10,000 or 5,000 barrels per day. How do I pay back my investors?” Okulaja insisted that though the law guarantees domestic crude supply, most refiners are unable to access the required quantity, saying, “We know we have the laws in the PIA, but the reality is that most refiners are not getting the quantity of crude they need in order to operate efficiently. If I need 300,000 barrels a month and you’re only giving me 30,000, the differential is too much for the refiner to bear.”

She also rejected the suggestion that Nigerian refiners were “spoilt,” affirming, “We are not spoilt; we are very hard-working, and we are pushing because it doesn’t make sense to export all our crude, and that’s why refiners are in the business to add value by refining our crude because there is no value added to exporting the crude. I can only blend what’s in my area; I cannot go and look for other blends because that will cost me money in transporting it to my refinery. We can only have more modular refineries spread across Nigeria where the different Bonny Light blends are.”

She concluded by highlighting that the lack of infrastructure is a major obstacle, stating, “Infrastructure is a problem. We cannot be delivering crude oil to refineries in tanks. There must be pipeline infrastructure, and that requires public-private collaboration.”

Meanwhile, CORAN President, Momoh Oyarekhua, argued that the PIA, while intended to support local refining, has complicated crude supply arrangements through conflicting clauses, stating, “The PIA, in the wisdom of the people that actually drafted it, felt the domestic crude obligation must be supported. But we, in the refinery sector, still feel there is a clog in the wheel of that aspect of the PIA that is supposed to enable the refinery.”

He pointed specifically to a condition in the law, saying, “You cannot have an obligation and also put a condition, which is the willing buyer, willing seller clause.”