The Federal Government has promptly addressed the requests of local crude oil refiners and other industry players, announcing on Monday that domestic refineries now have the option to purchase crude oil in either naira or dollars.
The statement also indicated that Nigeria’s combined crude oil and condensate reserves have risen to 37.5 billion barrels by January 1, 2024, boasting a life index of 68.01 years.
The Nigerian government shared this information during a presentation in Abuja by the Nigerian Upstream Petroleum Regulatory Commission. They introduced a new format for domestic crude oil allocation during the briefing.
According to the regulations outlined in Section 109(2) of the Petroleum Industry Act 2021, the NUPRC has introduced a new template to outline the requirements for Domestic Crude Oil Supply Obligation, marking a significant development in their operations.
“The commission in conjunction with relevant stakeholders from NNPC Upstream Investment Management Services, representatives of Crude Oil/Condensate Producers, Crude Oil Refinery-Owners Association of Nigeria, and Dangote Petroleum Refinery came up with the template for the buy-in of all.
“This is in a bid to foster a seamless implementation of the DCSO and ensure consistent supply of crude oil to domestic refineries,”Gbenga Komolafe, the Chief Executive of NUPRC, shared with reporters in Abuja.
In response to an inquiry regarding the preferred currency for purchasing crude oil according to the newly approved template, Komolafe clarified that transactions can be carried out in either naira or dollars. Furthermore, he mentioned that opting for naira transactions could alleviate the strain on the nation’s foreign exchange rate.
“The PIA intends to make the implementation (of crude oil obligation) very easy for the parties, both for the producers and refineries. So the answer simply is that the currency for the transaction would either be in naira or dollar. That is the simple answer.
“But we all know that if the transaction is carried out in naira, that itself will free the pressure on the exchange rate. That will help the exchange rate. So that is the intent and besides, the overall intent of the Petroleum Industry Act is to develop our midstream, which is a very laudable provision of the PIA.”
