The Federal Government has finally addressed the concerns raised by domestic crude oil refiners and other players in the industry.
On Monday, it was declared that indigenous refineries now have the option to purchase crude oil using either naira or dollars.
This development was revealed by the Nigerian Upstream Petroleum Regulatory Commission during a briefing in Abuja, where the new template for domestic crude oil supply obligation was unveiled.
The Commission, in collaboration with relevant stakeholders, formulated the template to ensure a smooth implementation of the Domestic Crude Oil Supply Obligation.
Gbenga Komolafe, the Chief Executive of NUPRC, emphasized the importance of the new template, stating, “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.”
Regarding the currency of transaction, Komolafe explained that crude oil can now be purchased in either naira or dollar. He highlighted the potential benefit of naira transactions in alleviating pressure on the country’s foreign exchange rate.
The previous challenge faced by modular refineries regarding the purchase of crude oil in dollars has been a significant concern. The inability to access foreign exchange for this purpose had threatened the operations of these refineries.
Eche Idoko, the Publicity Secretary of the Crude Oil Refinery Owners Association of Nigeria, expressed the difficulties faced by modular refineries in accessing dollars for crude oil purchase. He advocated for the sale of crude oil in naira to ease pressure on the naira and make refined products more affordable.
In addition to addressing the currency issue, the government also announced an increase in the country’s crude oil and condensate reserves, reaching a total of 37.5 billion barrels as of January 1, 2024. This announcement signifies the potential for continued growth in the oil and gas sector, with Nigeria already boasting a significant portion of gas reserves in Africa.