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Over the years, Nigeria’s domestic refineries have grappled with chronic challenges stemming from inadequate supply of crude feedstock by lessees (holders of a Petroleum Mining Lease). This persistent shortfall has significantly constrained refining capacities, leading to an overreliance on imported petroleum products.
Over the years, Nigeria’s domestic refineries have grappled with chronic challenges stemming from inadequate supply of crude feedstock by lessees (holders of a Petroleum Mining Lease). This persistent shortfall has significantly constrained refining capacities, leading to an overreliance on imported petroleum products. The repercussions are multifaceted: inflated petroleum prices, heightened security and environmental risks, and a weakened energy security framework that undermines the nation’s economic stability and self-reliance in energy supply.
To address these critical issues, the Petroleum Industry Act, 2021 (PIA), under Sections 8(c) and 109, outlines provisions for Domestic Crude Oil Supply Obligations. This statutory framework underpins the issuance of the Production Curtailment and Domestic Crude Oil Supply Obligations Regulations, 2023 (the “Regulations”) by the Nigerian Upstream Petroleum Regulatory Commission (the “Commission”). The Regulations establish a robust legal and operational framework to streamline production management and prioritize the optimal utilisation of crude oil for both domestic supply and export. This strategic intervention seeks to rectify systemic inefficiencies, ensure a steady feedstock supply for local refineries, and bolster Nigeria’s energy security by compelling compliance with domestic crude oil supply obligations. The Regulations aim to foster a more resilient petroleum value chain, reduce dependence on imports, and support the development of an energy-secure Nigeria. This marks a pivotal moment in aligning the nation’s oil production practices with its broader economic and strategic imperatives.
To ensure the effective implementation of these Regulations, the Commission issued the Guidelines for the Operationalisation of the Domestic Crude Oil Supply Obligation 2024 (the Guidelines). These Guidelines were made pursuant to Section 109 of the PIA and Parts III and IV of the Regulations. They outline the framework for enforcing the Domestic Crude Oil Supply Regulations and applicable to all Nigerian crude oil lessees and licensed domestic refineries.
This Newsletter delves into the practical implications of the recently issued Guidelines, providing a comprehensive analysis of the essential measures that lessees and domestic refinery operators must adopt to align with the updated regulatory framework. It outlines actionable strategies to ensure compliance, mitigate the risk of penalties, and promote seamless operations within Nigeria’s upstream oil and gas sector. By addressing these critical considerations, this Newsletter aims to empower industry stakeholders to navigate the evolving regulatory landscape effectively while fostering sustainable growth and operational efficiency.
Important Notice: The information contained in this Article is intended for general information purposes only and does not create a lawyer-client relationship. It is not intended as legal advice from Jackson, Etti, & Edu (JEE) or the individual author(s), nor intended as a substitute for legal advice on any specific subject matter. Detailed legal counsel should be sought prior to undertaking any legal matter. The information contained in this Article is current to the last update and may change. Last Update: October 1, 2024.
