NUPRC Consults Producers and Refiners on Crude Swap to Cut Domestic Haulage Costs

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) is currently consulting with producers and refiners on a domestic crude swap initiative aimed at reducing crude logistics costs by up to US$3 to US$4 per barrel. The swap mechanism would allow producers and refiners to exchange supply obligations by location and settle volumes through netting, thereby eliminating the need for physical transportation of crude oil across the country.

This proposal, still under consideration, would integrate with the existing Domestic Crude Supply Obligation (DCSO) and Domestic Gas Supply Obligation (DGSO) frameworks. The core motivation behind the swap is to eliminate unnecessary transport costs associated with the current crude market structure, even when barrels are intended for domestic processing.

Industry sources claim that the swap could result in annual savings of approximately US$246.6 million to US$328.8 million if a similar volume were swapped over the next six months. This swap mechanism is part of a broader effort to enhance the efficiency of Nigeria's domestic oil market, aiming to lower the cost of crude reaching refineries while reducing reliance on long and vulnerable transport chains.