The Federal Government has announced that indigenous refineries in Nigeria can now purchase crude oil in either naira or dollars, complying with demands from domestic refiners and other sector operators. This move aims to streamline the procurement process and ensure consistent supply to local refineries.
The government revealed this update through the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) during a briefing in Abuja, where it introduced a new template for domestic crude oil supply obligations. This template, developed in collaboration with key stakeholders, aims to facilitate a seamless implementation of the Domestic Crude Oil Supply Obligation (DCSO).
In response to queries about the currency of transaction, NUPRC Chief Executive Gbenga Komolafe clarified that transactions could be conducted in naira or dollars. He highlighted that naira transactions would ease pressure on the country's foreign exchange rate, aligning with the Petroleum Industry Act's goal of developing the midstream sector.
The new template's currency of payment section specifies that transactions can be in United States dollars, naira, or both, with the payment split as agreed in the Sales and Purchase Agreement (SPA) between the producer and the refiner. This development follows earlier concerns raised by modular refineries about the challenges of accessing foreign exchange for crude oil purchases, which led to threats of operational shutdowns.
Furthermore, the government announced an increase in Nigeria's total crude oil and condensate reserves to 37.5 billion barrels as of January 1, 2024, with a life index of 68.01 years. Gas reserves also rose to 209.26 trillion cubic feet as of the same date. These figures underscore Nigeria's abundant oil and gas resources and its potential to increase production and boost the economy.
