Dispute Over Crude Sales to Local Refineries
Oil producers from the Independent Petroleum Producers Group (IPPG) are contesting the directive to sell crude to local Nigerian refineries. They call on NNPC to adjust its crude allocations to tackle the supply shortages affecting these refineries. The group stresses the need for NNPC to support local refining capacities to stabilize market supply. This reallocation would address ongoing distribution challenges and bolster local production.
IPPG’s Position on NNPC’s Role
In recent correspondence with the Nigerian Upstream Petroleum Regulatory Commission, IPPG Chairman Abdulrazak Isa emphasized the need for NNPC to effectively utilize its allocated crude oil. He insists that NNPC’s allocation of 445,000 barrels per day should primarily support local refineries to stabilize the domestic market.
Strategic Recommendations for Crude Allocation
Isa suggests that the NNPC’s intervention volume, historically used for importing refined products, should now support domestic refining capabilities. He suggests dedicating this volume to a price hedge mechanism, managed by Afrexim Bank, to stabilize pricing and supply.
Call for a Fair Market Approach
The IPPG resists obligations forcing members to favor domestic refineries over exports, emphasizing a willing buyer, willing seller model. Their stance counters pressures and laws that could mandate local sales, possibly harming wider market dynamics. They advocate maintaining flexibility in sales to protect against restrictive market practices.
Concerns Over Production and Allocation Forecasts
The group is also wary of the current crude oil allocation methodology, which they argue is more reflective of refinery demands than actual domestic consumption needs. This approach, according to IPPG, could lead to inefficiencies and negatively impact producers.
Seeking Transparency and Collaboration
Isa has called for greater transparency in how crude allocations are determined and seeks an opportunity for IPPG to contribute to the production forecast, ensuring it aligns with operational realities. The group is committed to finding a solution that supports the national interest without compromising the oil producers’ business viability.
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