In a move aimed at addressing the needs of local crude oil refiners and fostering a more flexible operating environment, the Federal Government announced on Monday that domestic refineries now have the option to purchase crude oil in either naira or dollars.
The announcement came during a presentation in Abuja by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), where the government also shared that Nigeria’s combined crude oil and condensate reserves had increased to 37.5 billion barrels as of January 1, 2024, with a life index of 68.01 years.
The NUPRC introduced a new format for domestic crude oil allocation, outlined in Section 109(2) of the Petroleum Industry Act 2021, during the briefing. This development marks a significant step in the commission’s efforts to streamline operations and ensure consistent crude oil supply to domestic refineries.
Gbenga Komolafe, the Chief Executive of NUPRC, explained that the commission, in collaboration with relevant stakeholders, developed a template for Domestic Crude Oil Supply Obligation (DCSO) to facilitate seamless implementation and enhance operational efficiency.
Komolafe clarified that transactions for purchasing crude oil can now be conducted in either naira or dollars, providing flexibility to industry players. Opting for naira transactions could potentially alleviate pressure on the nation’s foreign exchange rate, he added.
“The PIA intends to make the implementation of crude oil obligation very easy for the parties, both for the producers and refineries. So the currency for the transaction would either be in naira or dollar,” Komolafe stated.
The article provides insights into the Federal Government’s decision to allow domestic refineries to purchase crude oil in naira or dollars, highlighting the potential impact on the nation’s oil and gas industry.
He further emphasized that conducting transactions in naira aligns with the overall intent of the Petroleum Industry Act to develop the midstream sector, underscoring the Act’s provisions aimed at promoting the growth and sustainability of Nigeria’s oil and gas industry.
The government’s decision to allow domestic refineries to purchase crude oil in either naira or dollars reflects its commitment to supporting local industry players and fostering a conducive business environment for the growth of Nigeria’s oil sector.
