BY SAM OTUONYE
The Commission Chief of Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Engr. Gbenga Komolafe, has harped on the failure of Oil Producing companies in fulfilling the provision of Petroleum Industry Act (PIA) 109, which mandates oil producing firms to allocate a specified quantity of crude to local refining companies under the Domestic Crude Oil Supply Obligation (DCSO) framework.
Engr. Komolafe, who expressed the concerns at the Stakeholders Engagement on the implementation of DCSO, lamented that those compliance gaps adversely affect the national budgetary targets.
He said: “The complaints received so far from within Commission, oil producers and Dangote refinery that are of concerns to the Commission include:
a.Inability to factor in the provisions of the law while executing contractual agreements. This has resulted in some companies being reluctant to
allocate a portion of their production to Domestic Refineries
b.Change in vessel nomination under 24 hours to laycan.
c.Inability to provide the required financial instrument / backing prior to loading.
d.Delay in Expected Time of Arrival of vessels resulting in production cut which is inimical to our national budgetary targets.
e.Frequent Change in laycans for crude oil allocated to domestic refineries f.Delays at loading terminals after the arrival of the loading Vessel.”
He said a Committee has been constituted to look into the non- compliance issues with a view to proffering solutions, adding that the integrity of the DCSO is sacrosanct.
“Although a Committee has been set up with representatives from the Commission, NMDPRA, NNPCL, OPTS, IPPG and Dangote Petroleum Refinery, to come up with a framework that will ensure hitchfree implementation of the DCSO provisions, it is necessary for me to also have a discussion with the Chief
Executives since the bulk stops on your desk.
“I therefore welcome constructive dialogue to examine the causes of these issues and solutions on how to mitigate future re-occurrence with immediate
effect.
“As a regulator, our priority is to uphold the integrity of the DCSO framework while fostering a conducive environment for the sustainable growth of Nigeria’s oil and gas industry. We remain dedicated to working closely with all stakeholders to overcome challenges, mitigate risks, and ensure compliance with statutory requirements,” he stated.
The regulatory boss pointed out that the meeting is crucial to enable stakeholders assess their collaborative efforts towards ensuring energy security and growth of national refining capacity for economic development.
“I would like to take this opportunity to remind you of the collaborative efforts between the Commission and your esteemed companies in operationalizing the provisions of Section 109 of the Petroleum Industry Act (PIA) 2021, which mandates the allocation of a portion of crude oil produced by your respective companies to Domestic Refineries in operations.
“In recognizing the significance of this mandate in fostering the growth
and sustainability of our domestic refining capacity, which is crucial for enhancing energy security,
promoting local value addition, and driving economic development in our country, the commission has been diligently working alongside your companies to ensure the effective implementation of this mandate.
“It is essential to acknowledge that the successful implementation of the DCSO requires careful coordination, collaboration, and proactive problem-solving among all stakeholders involved.
“Therefore, today’s meeting is convened with a specific objective in mind: to review the status of implementation of the mandate outlined in Section 109 of the Petroleum Industry Act (PIA).
“This includes a comprehensive
examination of the challenges and complaints raised by all stakeholders involved in the allocation and
offtake process. Our aim is to identify and address these challenges effectively, with the ultimate goal of
ensuring a seamless and efficient allocation process by the oil producers and offtake by the domestic refiners,
in strict adherence to statutory requirements and operational best practices.”
Continuing, the Commission Chief maintained the his office will closely monitor the activities of the operators to ensure absolute implementation of DCSO.
“While it is natural to encounter challenges, particularly during the initial stages of implementing Domestic Crude Oil Supply Obligation (DCSO), I want to assure you that the Commission is closely monitoring all developments to safeguard against any adverse impacts on national production and to prevent any violations of the DCSO provisions,” he averred.