Local Refineries in Nigeria Set to Receive 483,000 bpd from Oil Companies

New regulations unveiled on Friday mandate Nigerian oil producers to allocate 483,000 barrels per day (bpd) for local refineries in the initial half of 2024. This initiative, aimed at securing a reliable supply for domestic refining, underscores Nigeria's commitment as Africa's largest oil exporter to bolster its refining capacity and reduce dependence on imported petroleum products.

Key beneficiaries of this directive include the Dangote oil refinery, with a massive capacity of 650,000 bpd, and at least three government-operated refineries slated to commence operations in 2024. The Domestic Crude Supply Obligation guidelines released by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) outline the allocation specifics, designating the Dangote refinery as the primary recipient with a substantial share of 325,000 bpd.

NUPRC data further reveals that six refineries are anticipated to be operational by 2024, boasting a combined refining capacity of 864,500 bpd. This implies that oil producers will be mandated to supply slightly over half of the crude requirements for these domestic refining facilities.

Enforcing these provisions aligns with the Petroleum Industry Act passed in 2021, introducing a crucial mandate for Nigerian oil producers to contribute a portion of their crude output to domestic refineries. The objective is to safeguard these refineries from potential shortages in crude supplies, promoting a more sustainable and self-sufficient approach to meet the nation's refining needs. Despite the enactment of this legislation in 2021, its enforcement has been pending until now.

A comprehensive list of 48 oil producers, including major players like TotalEnergies, Chevron, Shell, and ExxonMobil, are set to participate in this program. The bulk of the production is expected to originate from their joint venture operations with the Nigerian state oil firm, the Nigerian National Petroleum Corporation (NNPC).

The significance of this initiative extends beyond mere regulatory compliance. It reflects Nigeria's strategic efforts to enhance its refining capabilities and foster a more robust and resilient energy sector. By mandating oil producers to allocate a substantial portion of their crude output to local refineries, the government aims to create a more balanced and self-sufficient energy ecosystem.

The Dangote refinery, as a major player in this endeavor, takes center stage in the distribution of allocated crude. With a remarkable capacity of 650,000 bpd, the refinery is poised to play a pivotal role in reshaping Nigeria's refining landscape. The guidelines provided by NUPRC serve as a roadmap for the equitable distribution of crude resources among participating refineries, ensuring an efficient and sustainable refining process.

While the regulatory landscape evolves, the commitment of key industry players, including TotalEnergies, Chevron, Shell, and ExxonMobil, underscores the collaborative approach required to achieve these objectives. The participation of these major oil producers signals a collective acknowledgment of the importance of domestic refining and a shared commitment to support Nigeria's journey toward energy self-sufficiency.

The introduction of regulations mandating Nigerian oil producers to allocate 483,000 bpd for local refineries marks a significant stride in the nation's pursuit of energy security and self-sufficiency. As the sector gears up for the operationalization of multiple refineries, the guidelines provided by NUPRC create a structured framework for equitable crude distribution. This initiative, supported by major industry players, underscores the collaborative efforts needed to fortify Nigeria's refining capabilities and reduce dependency on imported petroleum products.