- FG bans crude oil export meant for local refineries.
- Regulator warns producers against policy violations.
- Move aims to boost refining and ease forex pressure.
The Federal Government has officially prohibited the export of crude oil designated for local refineries to enhance domestic refining capacity and reduce reliance on imported petroleum products.
This decision, enforced through the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), is expected to ease foreign exchange pressures and stabilize the nation’s energy sector.
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Previously, an estimated 500,000 barrels per day allocated for domestic refining were diverted to international markets by producers and traders seeking quick foreign exchange earnings.
In response, the NUPRC has now mandated that any changes to crude cargoes meant for domestic refineries must receive explicit approval from its chief executive.
In a statement issued in Abuja, the NUPRC warned that it would deny export permits for crude designated for domestic use. Engr. Gbenga Komolafe, the Commission’s Chief Executive Officer, reaffirmed that diverting such crude violates the Petroleum Industry Act (PIA) 2021.
The law seeks to ensure a consistent supply of crude to local refineries, enhancing Nigeria’s energy security.
The decision follows a recent industry meeting attended by over 50 key stakeholders, where refiners and producers debated the challenges of implementing the Domestic Crude Supply Obligation (DCSO) policy.
Refiners accused producers of prioritizing foreign sales, forcing them to source crude from external markets. In contrast, producers argued that refiners often fail to meet commercial and operational agreements, necessitating alternative sales to prevent financial losses.
Despite these disagreements, industry players agreed to comply with the new regulations. The NUPRC has implemented measures to ensure strict enforcement of the DCSO policy, including the signing of the Production Curtailment and Domestic Crude Oil Supply Obligation Regulation 2023.
The commission has also developed a procedural framework to facilitate the law’s effective execution.
The move aligns with the government’s broader Naira-for-Crude initiative, designed to enable local refineries to purchase crude oil in naira and sell refined products within Nigeria’s domestic market.
With several refineries, including Dangote, Warri, and Port Harcourt, requiring a combined 770,500 barrels per day for optimal operation, the policy aims to guarantee stable feedstock supply.
NUPRC’s 2025 forecast projects Nigeria’s total crude production at 2.07 million barrels per day, with 37% of this output reserved for domestic refining. Major international and independent producers, including Shell, Chevron, and Seplat Energy, are expected to meet these supply obligations.
Meanwhile, Nigeria’s crude production has seen a 7.38% year-on-year increase, reaching 1.667 million barrels per day in December 2024.
However, despite this growth, the country still struggles to meet the Organization of Petroleum Exporting Countries’ (OPEC) production quota of 1.7 million barrels per day.
Industry experts and economic analysts have welcomed the ban, citing its potential benefits for the economy, foreign exchange stability, and energy security.
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However, they emphasize the need for sustained crude oil production growth and an improved regulatory environment to ensure the success of the new policy.
The government’s ability to enforce compliance while maintaining investment in crude oil production will be crucial in balancing industry needs and national economic priorities.
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