Oritsemeyiwa Eyesan says the proposed arrangement could cut logistics costs and improve compliance with domestic crude and gas supply obligations

The Nigerian Upstream Petroleum Regulatory Commission, led by Chief Executive Oritsemeyiwa Eyesan, has begun consultations with industry stakeholders on a crude swap arrangement designed to reduce supply costs and make more Nigerian crude available to domestic refineries.

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Eyesan disclosed the proposal during a courtesy visit to the Nigerian Midstream and Downstream Petroleum Regulatory Authority in Abuja on Thursday, as regulators seek more efficient ways to connect crude producers with the growing number of refineries operating in the country.

The proposed arrangement would allow producers with crude near export terminals to meet the domestic supply obligations of producers located closer to inland refineries, avoiding unnecessary transportation of crude across long distances.

Eyesan said the approach could improve compliance with both the Domestic Crude Supply Obligation and Domestic Gas Supply Obligation while making better use of existing logistics networks.

“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,” she explained.

“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.”

The commission said consultations were still at an early stage and that the operational and commercial details would have to be agreed with relevant stakeholders before implementation.

The Gas Aggregation Company Nigeria Limited is also expected to participate in developing the framework.

The proposal comes as Nigeria’s domestic refining industry expands and regulators face increasing pressure to ensure that local refineries can obtain sufficient feedstock at commercially viable prices.

NUPRC data showed a substantial improvement in domestic crude deliveries during the second quarter of 2026. About 53.7 million barrels were supplied to local refineries between April and June, representing 97.4 per cent performance under the DCSO.

That improvement followed a difficult first quarter, when 61.9 million barrels were allocated to domestic refineries but only 28.5 million barrels were actually supplied, according to NUPRC data.

The gap highlighted the difficulty of converting regulatory allocations into physical deliveries, with pricing and commercial conditions emerging as important obstacles. NUPRC’s existing framework operates within a willing-buyer, willing-seller structure.

The commission’s proposed crude swap therefore seeks to address not only availability but also the logistical inefficiencies that can arise when producers are required to move crude over considerable distances to satisfy individual obligations.

The issue has become increasingly important as domestic refining capacity grows.

The Dangote Petroleum Refinery, with a capacity of 650,000 barrels per day, is among the major facilities driving demand for locally produced crude, while other private and modular refineries are also seeking reliable feedstock.

Recent industry discussions have also focused on the cost of domestic crude.

Reuters reported that Nigeria is considering reforms that could allow producers linked to international oil companies to supply nearby refineries directly, alongside possible discounts reflecting savings on transportation and handling.

Responding to Eyesan’s visit, NMDPRA Chief Executive Rabiu Abdullahi Umar commended the NUPRC’s enforcement of domestic crude supply obligations and described reliable local feedstock as important to the growth of Nigeria’s refining industry.

Umar, however, stressed that pricing remained central to the success of domestic crude transactions.

Although the Petroleum Industry Act provides for willing-buyer, willing-seller transactions, he noted that the price at which crude is supplied ultimately affects whether local refining is commercially sustainable.

The NMDPRA also expressed support for strategic petroleum reserves, which it said could strengthen energy security and contribute to greater price stability.

The two regulators’ engagement reflects a broader effort to improve coordination across Nigeria’s petroleum value chain, from upstream production to refining and distribution.

Nigeria’s crude production has also shown signs of recovery. NUPRC reported that crude oil production reached an average of 1.56 million barrels per day in June 2026, while combined crude and condensate production averaged 1.735 million barrels per day, the highest crude output recorded since April 2020.

That rising production provides an opportunity to supply more domestic refineries, but the challenge is ensuring that available crude reaches the right facilities at competitive prices.

NUPRC has previously maintained that domestic crude obligations are intended to support the country’s refining capacity, with its regulatory framework requiring crude allocations to take account of refinery requirements, crude quality and production profiles.

For Eyesan, the proposed crude swap offers a potentially practical way of closing some of the remaining gaps without creating unnecessary transportation costs.

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If the consultations produce an agreed framework, the arrangement could give producers and refiners greater flexibility while strengthening the government’s broader push to turn Nigeria’s expanding refining capacity into a more reliable source of locally produced petroleum products.