NUPRC Plans Oil Swap Framework to Raise Supply, Cut Logistics Costs

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) is initiating talks with industry participants to establish a framework for domestic crude oil and gas supply, with a focus on a swap arrangement to lower logistics expenses and boost feedstock accessibility for local refineries. NUPRC Chief Executive, Mrs Oritsemeyiwa Eyesan, shared this information during a visit to the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) in Abuja, stating that discussions on the proposed crude oil swap were still in their preliminary stages.

According to the NUPRC, the framework would enable producers or suppliers meeting domestic supply obligations to exchange their commitments based on the location of their crude oil and the proximity of other suppliers to domestic off-takers. This approach would allow companies to bypass the need to transport crude over extensive distances to fulfill specific commitments. Instead, the swap would facilitate agreements between entities, leading to the settlement of transactions via a netting mechanism.

Eyesan elaborated that the swap mechanism would enable companies with obligations near export facilities to exchange supplies with counterparts having inland obligations close to domestic off-takers. The framework, once finalized, would enhance compliance with the Domestic Crude Supply Obligation (DCSO) and Domestic Gas Supply Obligation (DGSO). It is anticipated that the gas component would be coordinated with the Gas Aggregation Company of Nigeria Limited (GACN).

The move aims to address the recent surge in domestic refinery crude supply, although crude imports by local refiners persist. NUPRC statistics indicated that domestic refineries received 53.7 million barrels of crude from April to June 2026, achieving a 97.4 percent performance under the DCSO for the second quarter. Despite the progress, Eyesan emphasized that the commission is exploring further measures with industry stakeholders to tackle ongoing crude import needs and enhance domestic supply efficiency.

Eyesan also pledged to strengthen cooperation with NMDPRA, underscoring the importance of better coordination among regulators throughout the petroleum value chain. The meeting between the two agencies served to reaffirm their resolve for closer collaboration, following a prior visit by NMDPRA Chief Executive Rabiu Umar to the NUPRC shortly after his appointment.

Umar commended the NUPRC for a transparent and credible 2025 licensing round and highlighted the regulator's enhanced enforcement of domestic crude supply to local refineries. However, he noted that pricing would remain a vital consideration in implementing domestic supply arrangements, given the Petroleum Industry Act (PIA) allows for transactions based on a willing buyer, willing seller basis.

Umar also expressed support for the establishment of strategic petroleum reserves, underlining their potential to bolster Nigeria's energy security and contribute to price stability. The proposed swap mechanism is expected to be part of broader initiatives by the regulators to enhance coordination across the upstream, midstream, and downstream segments of the petroleum industry.