The Independent Petroleum Producers Group (IPPG) has raised concerns over potential government policies that may require them to sell crude oil directly to local refineries, including the Dangote Refinery. The group has made it clear that they should not be compelled into such arrangements, as it could have economic repercussions.
In a letter dated August 16, 2024, addressed to the Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe, IPPG Chairman Abdulrazak Isa highlighted the ongoing crude supply shortages affecting local refiners.
He urged the Nigerian National Petroleum Company Limited (NNPCL) to intervene using its allocated 445,000 barrels per day of crude oil. Isa emphasized that this volume, historically used to ensure domestic fuel availability, should be reserved for local refineries under proper financial structures.
The IPPG expressed support for boosting local refining capacity but rejected any obligation to subsidize other parts of the oil and gas industry. Isa reiterated the need for crude oil sales to operate under the “willing-buyer, willing-seller” model, stressing that producers should have the freedom to choose their buyers and negotiate long-term contracts.
The group raised concerns that recent developments, including crude oil production forecasts and supply requirements issued by NUPRC for the second half of 2024, could put undue pressure on producers. According to Isa, some IPPG members had already received requests from Dangote Refinery for crude oil supply, which contradicted the spirit of free-market principles.
In response, the IPPG called for greater transparency and clarity in how crude oil allocations were being determined. Isa also urged the NUPRC to ensure that production forecasts reflect the actual needs of local consumption rather than favoring refinery demands.
This debate comes amid mounting tensions between the government, local refiners, and international oil companies (IOCs). The Dangote Group has accused foreign oil producers of prioritizing exports to Asian markets, leaving local refineries struggling to secure crude supplies. On the other hand, the NUPRC insisted that it had facilitated the supply of over 29 million barrels of crude oil to the Dangote Refinery earlier this year.
However, the Dangote Group denied receiving the full volume of crude oil that NUPRC claims to have supplied, further fueling the dispute between both parties. The refinery’s spokesperson, Anthony Chiejina, confirmed that while they appreciated the allocation, they had yet to receive most of the cargoes.
