The Nigerian Upstream Petroleum Regulatory Commission convened a meeting yesterday of all parties, to agree on a sustainable template in a bid to resolve the lingering inability of oil producers to adequately supply local refineries crude feedstock.

In a statement made public yesterday that the federal government and crude oil producers in the country had now committed to working towards a viable supply of crude oil to Nigeria’s refineries under a market-determined pricing system.

The oil producers came under the umbrella of the Oil Producers Trade Section (OPTS) of the Lagos Chamber of Commerce and Industry (LCCI) to the meeting called by NUPRC.

They agreed to concede to a framework that would be mutually beneficial, with the aim of ensuring that local refineries were not strangulated due to “off-the-curve” prices, the statement added.

It said the aim was to ensure that while the operators did business optimally, the refineries were not also starved of feedstock.

The issue of pricing for local crude sold to refineries in Nigeria had remained a major problem, with Dangote Refinery recently accusing the International Oil Companies (IOCs) of having a mark-up price of as much as $6 over the normal rates.

NUPRC in the meeting directed oil refiners in the country to provide monthly price quote on crude supply to ensure a more seamless process

The focus of the meeting held at the instance of the Chief Executive of the commission, Gbenga Komolafe, was on the status review of the framework for seamless operationalisation of domestic crude oil supply obligation template.

NUPRC said it was part of efforts to effectively implement key sections of the Petroleum Industry Act (PIA), especially the issue of pricing and crude supply to the domestic refineries.

At the event, Komolafe said President Bola Tinubu was fully committed to providing a level playing field for producers and refiners to do business in the industry.

He emphasised the need for a rule of engagement to ensure that the pricing model from the oil producers did not hinder the domestic refineries.

Komolafe directed producers and refiners to provide NUPRC with cargo price quotes on crude supply and delivery for effective monitoring and regulation of transactions among parties.

“We need to have the price quoted monthly,” the statement quoted Komolafe as directing.

The NUPRC chief executive pointed out the convergence between the Domestic Crude Supply Obligation (DCSO) and the country’s energy security, indicating that his team was re-engineering its regulatory processes to address the challenges.

He added, “We allow all our processes to be transparent. While the federal government targets the implementation of the regulation, all parties must submit to the rules of engagement as a guide for operation.”

He said the regulator was committed to driving the willing buyer/willing seller provision.

Komolafe stated, “We have to discuss pricing, especially, as parties have committed to respecting their domestic crude oil obligation. As the regulator, we don’t want the upstream sector to be operated sub-optimally through cost under-recovery.

“So, the regulator is very alive to that. In crude pricing we will never allow price strangulation to ‘disincentivise’ our domestic refining capacity optimisation. The regulator does not support cost under-recovery in the upstream sector.

“We will continue to work to ensure that crude supply profiteering, as a negative factor that can strangulate our domestic refining capacity optimisation, is disallowed.”