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NUPRC has begun wide-ranging consultations with industry stakeholders on a domestic crude oil and gas swap initiative aimed at reducing logistics costs.
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The proposed swap mechanism is expected to improve compliance with the Domestic Crude Supply Obligation (DCSO) and Domestic Gas Supply Obligation (DGSO), while strengthening coordination with the Gas Aggregation Company Nigeria Limited (GACN).
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The Commission disclosed that domestic crude deliveries to local refineries surged to 53.7 million barrels in the second quarter of 2026, achieving a 97.4 per cent performance rate despite continued crude imports into the country.
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NMDPRA has thrown its weight behind the initiative, while advocating the creation of strategic petroleum reserves to enhance energy security.
August 14, (THEWILL) — The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has commenced consultations with key players in the oil and gas industry on a proposed domestic crude oil and gas swap framework aimed at eliminating supply bottlenecks, reducing transportation costs and improving crude availability for local refineries.
The initiative, which forms part of ongoing efforts to strengthen Nigeria’s domestic refining capacity and reduce inefficiencies across the petroleum value chain, is expected to improve implementation of the Domestic Crude Supply Obligation (DCSO) and the Domestic Gas Supply Obligation (DGSO).
The Commission Chief Executive, Mrs Oritsemeyiwa Eyesan, disclosed the proposal during a courtesy visit to the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) in Abuja on Thursday.
According to Eyesan, the proposed swap arrangement would allow crude producers located close to export terminals to exchange their domestic supply obligations with operators whose facilities are situated nearer to local refineries, thereby eliminating the need to transport crude across long distances.
She explained that rather than moving crude from one end of the country to another, companies involved in the arrangement would simply exchange volumes through an agreed settlement mechanism.
“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 to net off,” Eyesan said.
She noted that discussions on the crude swap initiative remain at an early stage but expressed confidence that once operational, the framework would significantly improve efficiency in domestic crude allocation.
Eyesan added that the Commission would work closely with the Gas Aggregation Company Nigeria Limited (GACN) to ensure effective implementation of both crude and gas supply obligations.
The NUPRC boss revealed that enforcement of domestic supply obligations has already yielded impressive results.
According to the Commission’s latest data, Nigerian refineries received 53.7 million barrels of crude oil between April and June 2026, representing a 97.4 per cent compliance rate under the Domestic Crude Supply Obligation during the second quarter of the year.
She, however, acknowledged that crude importation for refining purposes persists, underscoring the need for additional measures to optimise domestic crude allocation and improve supply efficiency.
Eyesan pledged stronger collaboration between the NUPRC and the NMDPRA to address regulatory challenges and deepen reforms across Nigeria’s petroleum industry.
NMDPRA Backs Strategic Petroleum Reserves
Responding, the Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Mallam Rabiu Abdullahi Umar, congratulated the NUPRC for successfully conducting what he described as a seamless and credible 2025 licensing round.
He also commended the Commission for improving enforcement of domestic crude supply obligations, saying the development has boosted crude availability for local refiners.
While noting that the Petroleum Industry Act provides for transactions on a willing buyer, willing seller basis, Umar observed that pricing remains one of the major challenges affecting crude supply.
He therefore advocated the establishment of strategic petroleum reserves, saying the move would strengthen Nigeria’s energy security, protect the country against supply disruptions and contribute to greater price stability in the domestic market.
The two regulatory agencies also pledged closer collaboration in implementing reforms aimed at improving efficiency, supporting local refining and advancing the Federal Government’s broader objective of achieving sustainable energy security.
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Nigeria’s Domestic Crude Supply Obligation was introduced under the Petroleum Industry Act to guarantee adequate crude oil supply to local refineries before export commitments are met.
The policy has gained renewed importance following the expansion of domestic refining capacity, with regulators stepping up enforcement to reduce dependence on imported petroleum products, conserve foreign exchange and strengthen national energy security.
The proposed domestic crude and gas swap framework is expected to further streamline crude deliveries by replacing costly physical transportation with exchange arrangements between operators, making the domestic supply system more efficient and reliable.
Felix Ifijeh is a journalist with years of professional reporting experience. Known for his keen news sense, compelling storytelling and commitment to accurate, impactful reporting, he has built a reputation for turning leads into clear, engaging, and well-structured reports that resonate with readers. His work reflects deep newsroom experience and a commitment to accurate, impactful journalism.
