The Nigerian government has announced that indigenous refineries and other operators in the oil sector can now purchase crude oil using either naira or dollars, complying with demands from domestic crude oil refiners.
This decision was disclosed by the Nigerian Upstream Petroleum Regulatory Commission during a briefing in Abuja.
They also revealed that Nigeria’s total crude oil and condensate reserves grew to 37.5 billion barrels as of January 1, 2024, with a projected lifespan of 68.01 years.
The Commission, in accordance with the Petroleum Industry Act 2021, has developed a template for Domestic Crude Oil Supply Obligation (DCSO) with input from stakeholders including NNPC Upstream Investment Management Services, crude oil producers, and refinery associations.
This template aims to facilitate the consistent supply of crude oil to domestic refineries.
The Chief Executive of NUPRC, Gbenga Komolafe, emphasized that the transaction currency could be either naira or dollars, noting that using naira could ease pressure on the country’s foreign exchange rate.
The template has been endorsed by all relevant parties to ensure its effectiveness in implementing the DCSO.
Under the new template, payments for crude oil can be made in either US dollars or naira, or a combination of both as agreed between the producer and the refiner in the Sale and Purchase Agreement (SPA).
Previously, modular refineries in Nigeria were at risk of closure due to difficulties in accessing foreign exchange for crude oil purchases, as the commodity is priced in dollars.
Nigeria currently has 25 licensed modular refineries with a total capacity of producing 200,000 barrels of crude oil per day, although not all are operational due to challenges in procuring crude amidst the foreign exchange crisis.
