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

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) is initiating consultations with industry stakeholders to establish a new framework for domestic crude oil and gas supply. A key component of this proposed system is a swap arrangement designed to cut logistics costs and enhance the availability of feedstock for Nigeria's local refineries.

NUPRC Chief Executive Mrs. Oritsemeyiwa Eyesan announced the consultations during a visit to the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA). She explained that the proposed crude oil swap would allow producers with domestic supply obligations to exchange these obligations based on their crude's location and the proximity of other suppliers to domestic offtakers. This would eliminate the need for long-distance crude transportation, with transactions settled through a netting mechanism.

Eyesan stated that the finalized framework is expected to boost compliance with Domestic Crude Supply Obligation (DCSO) and Domestic Gas Supply Obligation (DGSO). The gas component will be coordinated with the Gas Aggregation Company of Nigeria Limited (GACN). This move comes despite a significant increase in crude supplied to domestic refineries in the second quarter of 2026, where they received 53.7 million barrels, achieving 97.4% of the DCSO target. However, local refiners continue to import crude oil.

The NUPRC is exploring further measures with stakeholders to address the ongoing need for crude imports and improve domestic supply efficiency. Eyesan also committed to strengthening collaboration with the NMDPRA, emphasizing the importance of coordinated regulatory efforts across the petroleum value chain. The NMDPRA Chief Executive, Rabiu Umar, congratulated the NUPRC on its successful 2025 licensing round and improved enforcement of domestic crude supply.

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How the swap works is that I have an obligation somewhere and I am close to an export facility. Somebody else has an obligation inland and his own facility is close to a domestic offtaker. So, instead of trying to move from one end to the other, we just agree on a swap arrangement and there is a mechanism for them netting off.