Nigeria Rules Out Price-Fixing for Crude Oil

The Nigerian government has ruled out the possibility of price-fixing for crude oil, affirming its commitment to international best practices by maintaining a willing-seller, willing-buyer model. This stance was reiterated by Gbenga Komolafe, Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), during a meeting in Abuja with members of the Oil Producers Trade Section (OPTS) and the Independent Petroleum Producers Group (IPPG).

The meeting was convened to address industry concerns over domestic crude supply obligations, pre-existing contracts, and pricing issues affecting Nigeria’s energy security. Komolafe stressed that while the NUPRC remains firm in its regulatory duties, it is equally focused on fostering growth within the sector without implementing arbitrary measures that could hinder investment.

Market Dynamics Over Price Controls

In a statement issued by the NUPRC, Komolafe emphasised the government’s commitment to a market-driven approach: “The government supports the willing-seller, willing-buyer model in line with international best practices and will not resort to price-fixing.” He assured stakeholders that the NUPRC is open to addressing operational challenges as long as they align with national interests and promote sectoral growth.

This clarification comes amid growing concerns within the oil and gas sector about the pre-allocation of crude to domestic refiners and the potential impact on existing contracts. Industry groups, including OPTS and IPPG, sought reassurances about maintaining transparent pricing mechanisms and safeguarding investments.

Komolafe reiterated that regulatory measures would be implemented without disrupting market dynamics, adding, “We remain committed to regulating the industry as mandated by law, but our approach is focused on facilitating growth and avoiding actions that might discourage operators or investment.”

Strategic Roadmap to Boost Oil Production

The NUPRC also outlined a strategic five-point agenda aimed at increasing Nigeria’s oil production in 2025. This includes:

Boosting Production by One Million Barrels: Initiatives are underway to significantly increase crude output to support national revenue goals.

Enhancing Hydrocarbon Measurement Transparency: Improved metering and cargo regulations are being introduced to ensure accurate reporting.

Digitalising Regulatory Activities: Efforts are being made to digitalise upstream regulatory functions to enhance compliance and efficiency.

Optimising Production Costs: By reducing unit costs per barrel, the government aims to maximise revenue generation.

Revitalising Non-Performing Assets: The NUPRC plans to conduct licensing bid rounds to bring idle assets back into production, in line with the Petroleum Industry Act 2021.

Komolafe revealed that the commission has developed a template to address operational gaps by leveraging the strengths of different industry players. “This initiative promotes collaboration, networking, and operational optimisation across the value chain,” he explained.

Domestic Crude Supply Obligations and Compliance

To secure a consistent supply of crude oil for domestic refining, the NUPRC recently enacted the Production Curtailment and Domestic Crude Oil Supply Obligation Regulation 2023. This framework is designed to enforce compliance with domestic supply obligations, ensuring energy security and industry stability.

Komolafe made it clear that non-compliance would attract strict penalties, including the potential denial of export permits for crude allocated to domestic refiners. However, he clarified that this measure targets only non-compliant operators, stating, “This is not a threat to legitimate industry players but a necessary step to ensure adherence to the law and safeguard national interests.”

Commitment to Investor Confidence and Energy Security

Throughout the discussions, Komolafe stressed the government’s commitment to maintaining investor confidence while protecting national energy security. He assured stakeholders that the administration would continue to support fair and reasonable pricing mechanisms without direct interference.

“We are dedicated to safeguarding investor interests but will not compromise on energy security or policies that advance national development,” Komolafe concluded.

The meeting concluded with industry leaders acknowledging the government’s transparent approach to regulatory issues, particularly regarding domestic crude supply obligations. As Nigeria seeks to enhance its energy security and boost oil production, the NUPRC’s strategic initiatives are expected to play a pivotal role in achieving these objectives.

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