Oil Producers Push Back Against Mandatory Crude Supply to Dangote Refinery, Demand International Market Rates

Oil Producers Reject Forced Crude Sales to Dangote Refinery, Demand Market-Driven Approach.

The Independent Petroleum Producers Group (IPPG) has warned against compulsory crude oil sales to the Dangote Refinery and other local refineries in Nigeria, advocating for a “willing buyer, willing seller” framework instead.

In a letter to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), IPPG Chairman Abdulrazak Isa expressed concerns about the regulator’s plan to force producers to sell crude to local refineries. He argued that the Nigerian National Petroleum Corporation (NNPC) should utilize its allocated 445,000 barrels per day intervention crude oil volume to meet domestic demand, with excess production treated as export volumes.

Isa emphasized that any sales above the allocated volume should adhere to the international market’s “willing buyer, willing seller” framework, allowing refiners to export excess products and boost foreign exchange earnings.

The IPPG also raised concerns about recent developments in Nigeria’s oil industry, including the domestic crude oil refining requirements and production forecast announced by the NUPRC. They object to the request for monthly crude oil supply quotations to licensed refineries, particularly the approach taken by the Dangote Refinery, which they believe conflicts with the Petroleum Industry Act 2021.

The group advocates for a mutually beneficial solution that respects commercial agreements, economic interests, and business models in the oil and gas sector, without compromising the willing-buyer, willing-seller framework.