The Nigerian Upstream Petroleum Regulatory Commission has confirmed the commencement of consultations with relevant industry stakeholders on a domestic crude oil and gas swap arrangement aimed at cutting supply costs and ensuring more crude is available to Nigerian refineries.
The initiative is expected to strengthen compliance with the Domestic Crude Supply Obligation and Domestic Gas Supply Obligation while reducing the need to physically transport crude over long distances to meet supply requirements.
The NUPRC Chief Executive, Oritsemeyiwa Eyesan, disclosed this during a courtesy visit to the Nigerian Midstream and Downstream Petroleum Regulatory Authority in Abuja on Thursday.
In a statement issued by the NUPRC Head of Media and Corporate Communications, Eniola Akinkuotu, on Friday, Eyesan said the proposed arrangement would allow producers and refiners to optimise existing logistics and supply networks.
She said the commission was consulting relevant stakeholders to develop the modalities for the scheme, which would also involve the Gas Aggregation Company Nigeria Limited.
Eyesan explained that a swap arrangement would enable crude producers with export facilities to meet the obligations of producers closer to domestic refineries, eliminating the need to transport crude unnecessarily across the country.
The statement read, “The Nigerian Upstream Petroleum Regulatory Commission is consulting widely with stakeholders in the industry on the idea of a domestic crude oil and gas swap that would reduce cost and increase availability of products in the country.
“Once all the modalities are finalised, there would be improved compliance with the Domestic Crude Supply Obligation and the Domestic Gas Supply Obligation.
“How the swap works is that I have an obligation somewhere and I am close to an export facility. Somebody else has an obligation inland and his own (facility) is close to a domestic offtaker.
“So, instead of trying to move from one end to the other, we just agree on a swap arrangement and there is a mechanism for them netting off,” she said.
The proposal comes against the backdrop of a significant improvement in crude deliveries to domestic refiners.
NUPRC data showed that 53.7 million barrels of crude oil were supplied to local refiners between April and June 2026, representing 97.4 per cent performance under the DCSO during the second quarter.
Despite the improvement, crude oil imports into the country have continued, with some refiners still relying on foreign crude to sustain operations.
Refiners have repeatedly complained that some crude producers sell locally supplied crude at premium prices, making it more expensive for them to source Nigerian crude than imported alternatives and undermining the competitiveness of domestic refining.
Eyesan said the persistence of imports had made it necessary for the commission to explore more efficient mechanisms for allocating and delivering domestic crude to refineries.
She, however, noted that discussions on a crude oil swap were still at an early stage, stressing that all necessary modalities would have to be agreed upon before implementation.
The NUPRC boss also pledged to strengthen collaboration with the NMDPRA to address challenges across the petroleum value chain.
Responding, the NMDPRA Chief Executive, Rabiu Abdullahi Umar, congratulated the upstream commission on what he described as a seamless and credible 2025 licensing round.
Umar also commended the NUPRC for improving enforcement of domestic crude supply to local refineries, saying the development was important to the growth of Nigeria’s refining industry.
He noted, however, that pricing remained a major consideration in domestic crude transactions.
According to him, although the Petroleum Industry Act provides for transactions to be conducted on a willing-buyer, willing-seller basis, the price of crude remains critical to the viability of domestic refining.
The NMDPRA therefore expressed support for the establishment of strategic petroleum reserves, saying such reserves would strengthen Nigeria’s energy security and contribute to price stability.
The proposed crude swap arrangement adds to ongoing efforts by regulators to ensure that increasing domestic refining capacity is matched by reliable and competitively priced crude supplies.
With the Dangote Petroleum Refinery and other private refineries expanding operations, regulators face growing pressure to ensure that domestic crude supply obligations translate into actual feedstock availability for local refiners.
SOURCE: PUNCH
