NUPRC proposes crude swap to cut refinery costs, boost supply

Nigeria's Upstream Petroleum Regulatory Commission (NUPRC) is initiating consultations with industry stakeholders on a domestic crude oil and gas swap arrangement. This proposed system is designed to reduce supply costs and ensure a greater volume of crude oil is available for Nigerian refineries.

“

The Nigerian Upstream Petroleum Regulatory Commission is consulting widely with stakeholders in the industry on the idea of a domestic crude oil and gas swap that would reduce cost and increase availability of products in the country.

The initiative is expected to bolster compliance with the Domestic Crude Supply Obligation (DCSO) and Domestic Gas Supply Obligation (DGSO). It also aims to decrease the need for physically transporting crude oil over long distances to meet supply requirements. NUPRC Chief Executive Oritsemeyiwa Eyesan discussed the proposal during a visit to the Nigerian Midstream and Downstream Petroleum Regulatory Authority.

According to a statement from NUPRC Head of Media and Corporate Communications, Eniola Akinkuotu, Eyesan explained that the swap arrangement would allow producers with export facilities to fulfill the obligations of producers located closer to domestic refineries. This would eliminate unnecessary crude transportation across the country. "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," Eyesan elaborated.

“

Once all the modalities are finalised, there would be improved compliance with the Domestic Crude Supply Obligation and the Domestic Gas Supply Obligation.

The proposal arrives amid a notable increase in crude deliveries to domestic refiners. NUPRC data indicates that 53.7 million barrels of crude oil were supplied to local refiners between April and June 2026, achieving 97.4 percent performance under the DCSO for the second quarter. Despite this improvement, crude oil imports persist, with some refiners still relying on foreign crude. Refiners have frequently complained that some local crude producers sell at premium prices, making Nigerian crude more expensive than imported alternatives and hindering the competitiveness of domestic refining.

“

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.