Nigeria's upstream oil regulator has announced a bold move to ensure the country's energy needs are prioritized, stating that oil producers who fail to meet their required supply quotas to local refineries will be denied export permits. This decision is aimed at promoting domestic energy self-sufficiency and reducing reliance on foreign suppliers.

Under the Petroleum Industry Act, oil producers, both domestic and international, are required to allocate a specific volume of crude for Nigeria's refineries before they can export. This requirement, known as the domestic crude supply obligation, ensures that local energy needs are met before oil is shipped abroad. The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has been working with oil producers and refiners to address the ongoing dispute over the domestic crude supply obligation.

According to NUPRC chief Gbenga Komolafe, refiners have accused producers of failing to meet their required supply quotas, while producers have countered that refiners are offering prices too low to be viable, pushing them to seek alternative markets. Komolafe warned that "the diversion of crude cargo designated for domestic refineries is a contravention of the law and the Commission will henceforth disallow export permits for designated crude cargos for domestic refining."

The Dangote Refinery, owned by Africa's richest man, is expected to account for the largest share of crude oil supply, with a projected requirement of 550,000 barrels per day (bpd) for the first half of 2025. Nigerian refineries are projected to require a total of 770,500 barrels of crude oil per day (bpd) during the same period.

This move is seen as a significant step towards reducing Nigeria's reliance on foreign suppliers and strengthening fuel independence. Earlier, it was reported that Nigeria's petrol imports have reached their lowest level in eight years, thanks to the country's new mega-refinery. The $20.5 billion Dangote refinery has a processing capacity of 650,000 barrels per day, making it the largest refinery in Africa.

The implications of this decision are far-reaching, with potential benefits for the Nigerian economy and energy sector. By prioritizing domestic energy needs, Nigeria can reduce its reliance on foreign suppliers, create jobs, and stimulate economic growth. However, it remains to be seen how oil producers will respond to this new requirement and whether it will lead to increased investment in local refineries.

As Nigeria continues to navigate its energy transition, this move marks a significant shift towards prioritizing domestic energy needs. With the country's new mega-refinery leading the charge, Nigeria is poised to become a major player in the African energy landscape.