Domestic Crude Oil Supply & Gas Delivery Compliance in Nigeria

In the latest episode of Talking Legal with TEMPLARS, Senior Associate, Ifure Udofa, and Associate, Adebimpe Mosanya, dissect the impact of Nigerian law and regulations, especially, the Production Curtailment and Domestic Crude Oil Supply Obligation Regulations and the Domestic Gas Delivery Obligation Regulations on the Nigerian oil and gas industry.

Their discussion emphasizes the critical role of Domestic Crude Supply Obligations, which ensures that local refineries have access to crude oil produced in-country and seeks to reduce the nation’s reliance on crude oil imports and stabilise the local refining industry.

Similarly, the Domestic Gas Delivery Obligations aim to secure a reliable supply of natural gas for domestic use, addressing the increasing demand from the power, industrial, and commercial sectors.

Ifure and Adebimpe, analyze the practical and legal implications of this legal framework including penalties for non-compliance, such as underutilisation of production quotas and failure to submit required quotations for crude oil supply. They also address implementation bottlenecks, including the challenges with unravelling long-term contractual obligations of export crude oil supply.

See below the key points from the discussion:

[00:30 – 02:00] Mandatory Domestic Supply Obligations.

Nigeria’s domestic petroleum market obligations.
Producers’ requirements to supply a certain portion of their crude oil and gas production to the domestic market to meet local demand.

[02:00 – 04:00] Market Development and Local Refining

How the new regulations aim to reduce Nigeria’s dependency on crude oil exports.
Domestic refining sector growth is encouraged, aiming for increased refining capacity to meet the demand for refined products.

[04:00 – 06:30] Willing Buyer-Willing Seller Framework

The establishment of a market-driven relationship between producers and domestic refiners.
Fulfillment of domestic supply obligations, facilitating smooth crude oil transactions in the local market.

[06:30 – 08:30] Increased Refining Capacity

Projections of how in-country refining capacity will increase due to the new framework.
This aims to satisfy Nigeria’s domestic crude oil demand, reducing the need for imports.

[08:30 – 10:00] Gas Commercialization

The consequences for a failure to issue a request for quotation.
The importance of gas commercialization.
There’s a push for increased gas utilisation as feedstock for industries and power generation, boosting industrialization.