Govt Won’t Interfere with Crude Oil Prices, NUPRC Reiterates
The Federal Government has reaffirmed its stance against price-fixing for crude oil, emphasizing its commitment to adhering to international best practices. Instead, the government will allow market forces to dictate prices, following the willing-seller, willing-buyer principle.
The Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) Gbenga Komolafe, stated this in Abuja during a meeting with members of the Oil Producers Trade Section and the Independent Petroleum Producers Group.
This is as the groups sought clarifications on certain operational challenges regarding the pre-allocation of crude oil to domestic refiners, pre-existing contracts amid domestic crude supply obligations, and pricing issues.
In a statement from the NUPRC, the meeting with major stakeholders in the country’s oil and gas sector was to discuss and fine-tune issues related to domestic crude supply obligations between producers and refiners. The meeting was aimed at enhancing Nigeria’s energy security.
Komolafe explained that while the commission remains committed to regulating the industry as mandated by law, it is also focused on fostering growth within the sector, avoiding arbitrary actions that could dissuade operators or hinder investments adding that in January, the Commission outlined a five-point agenda that would aid increased oil production in 2025.
The statement read, “The government had expressed commitment to the willing-seller, willing-buyer option which aligns with international best practices and affirmed that the government would support the upstream sector’s optimal functioning without resorting to price-fixing.”
He assured that the commission was at all times willing to positively address operational issues brought up by industry stakeholders so long as they would aid the growth of the sector and are in line with the national interest.
At the meeting, the OPTS and IPPG sought clarifications on certain operational challenges regarding the pre-allocation of crude oil to domestic refiners, pre-existing contracts amid domestic crude supply obligations and pricing issues.
Komolafe reassured stakeholders that while the Commission remains committed to regulating the industry as mandated by law, it is also focused on fostering growth within the sector, avoiding arbitrary actions that could dissuade operators or hinder investments.
In January, the commission outlined a five-point agenda that would aid increased oil production in 2025.
This includes effectively implementing initiatives to boost production by one million barrels, enhancing the transparency and accuracy of hydrocarbon measurement through metering and cargo regulations, digitalising upstream regulatory activities for better compliance, optimising unit costs per barrel to increase revenue, and conducting licensing bid rounds to revitalise non-performing assets in line with the provisions of the Petroleum Industry Act 2021.
Komolafe also revealed that the commission has developed a template to identify the needs of every participant within the value chain.
This template aims to address gaps by leveraging the capabilities of different players, thus fostering collaboration, networking, and operational optimisation. Wednesday’s meeting was in line with the initiative, to identify and address the needs of stakeholders as they arise in the course of operation.
To ensure a consistent supply of crude oil to domestic refiners, the commission early this month announced that significant regulatory actions to enforce compliance with the Domestic Crude Supply Obligation have been put in place, including the development and signing of the Production Curtailment and Domestic Crude Oil Supply Obligation Regulation 2023 along with the implementation of a DCSO framework and procedure guide.
The commission had emphasised that it would strictly enforce policies regarding implementation and defaults by oil companies and would not hesitate to deny export permits for crude oil intended for domestic refining if companies fail to meet their obligations.
During the meeting, Komolafe clarified that the reference to export permit denial was not a threat to legitimate industry players but specifically directed at non-compliant operators who may seek shortcuts and are in breach of the law.
He emphasised that the government is committed to protecting the interests of investors but will not compromise on issues that could jeopardise energy security or undermine national interests.
He reiterated the government’s stance on not interfering with product pricing, as long as prices remain reasonable and fair.
