• IOCs, independent oil producers worry over commercial, data security
• Crude oil edges slightly higher amid Middle East tensions

Operators in the oil sector expressed concerns over commercial and contract issues as Nigerian Upstream Petroleum Regulatory Commission (NUPRC) in Abuja, yesterday, moved to enforce mandatory supply of crude to local refineries.

Operators of local refineries, especially modular, said crude oil supply shortage has hampered their businesses, a situation which is projected to affect conventional refineries coming up in the country.

Insisting Nigeria needs to improve local refineries and address foreign exchange crisis, NUPRC Chief Executive, Gbenga Komolafe, told operators that the government will not fail to sanction defaulting oil companies.

According to him, operators have an obligation to act in accordance with national interest or risk a fine of $10,000; a penalty of 50 per cent of their fiscal price per barrel of crude oil not delivered to refineries; and denial of export permits.

Section 109 of the Petroleum Industry Act (PIA) had introduced Domestic Crude Supply Obligation (DCSO) to Nigeria’s oil industry to ensure domestic refineries are not starved of crude oil supply. But operators, who produce only diesel and aviation fuel, have consistently decried shortage.

Many of the crude oil producers, who gathered at NUPRC’s office, yesterday, expressed concern over commercial issues that may come up in such a transaction. They were worried about the logistics side of supply and safety of their data with NUPRC. They added that refiners would need to convince them that the off taker has dollars to pay for crude oil sustainably.

Komolafe said there was a need to make sure local refineries are working, stressing that the move will enable the government to strengthen the economy and the naira.

Apart from Dangote Refinery, NNPCL refineries and others, like BUA and Crude Oil Refinery Owners Association (CORAN), had earlier said the combined capacity of modular refineries in the country stands at 27,000 barrels per day.

Komolafe said: “The pre-emptive steps are being taken because it would send wrong and unbecoming signals to the international business community if operators of domestic refineries in one of the world’s largest crude oil-producing countries start importing feedstock for their production.”

Meanwhile, crude oil prices edged slightly higher yesterday, amid unrest in the Middle East, even as traders awaited an announcement by the United States Federal Reserve. Also, Brent sold for almost $87 per barrel at about 4:00p.m., gaining about 2.20 per cent increase.