NUPRC Proposes Crude Swap Scheme to Boost Supply to Local Refineries

By Benson Daniel

The Nigerian Upstream Petroleum Regulatory Commission has begun consultations with key players in the oil and gas industry on a proposed domestic crude oil and gas swap arrangement aimed at reducing supply costs and improving the availability of feedstock for local refineries.

The proposed arrangement is expected to make it easier for crude producers to meet their domestic supply obligations without having to transport barrels unnecessarily over long distances before they reach refineries.

Under the proposed system, producers located close to export facilities could effectively swap their domestic supply obligations with other producers whose operations are closer to local refineries. The arrangement would then allow the parties to settle their respective obligations through an agreed mechanism.

NUPRC Chief Executive, Oritsemeyiwa Eyesan, disclosed the plan during a meeting with the Nigerian Midstream and Downstream Petroleum Regulatory Authority, explaining that the commission was consulting widely with industry stakeholders before determining how the system would operate.

The proposal is coming as Nigeria seeks to strengthen the supply of locally produced crude to domestic refineries and reduce the industry’s dependence on imported crude feedstock.

Although the supply of crude to local refineries has improved considerably, some refiners continue to rely on imported crude because of logistical difficulties, commercial disagreements and differences between the location of crude production and refinery facilities.

NUPRC data showed that domestic refineries received 53.7 million barrels of crude oil and condensate between April and June 2026. The volume represented 97.4 per cent performance under the Domestic Crude Supply Obligation during the second quarter.

The improvement represents a significant change from the first quarter, when only 28.5 million barrels were actually supplied to local refineries out of 61.9 million barrels allocated. NUPRC had attributed the earlier shortfall largely to challenges surrounding pricing and the commercial terms between producers and refiners.

The proposed swap arrangement is therefore intended to address some of the practical challenges that can prevent crude from reaching refineries even when sufficient volumes have been allocated.

By allowing producers to fulfil obligations through coordinated swaps, the commission expects the industry to reduce transportation and handling costs while making the movement of crude more efficient.

The initiative could also support the government’s broader efforts to increase domestic refining and reduce the country’s reliance on imported petroleum products. A more reliable supply of local crude would give refineries greater certainty when planning production and could improve their ability to operate consistently.

However, the commission stressed that the crude swap proposal is still at the consultation stage. The necessary rules, commercial arrangements and operational procedures will have to be agreed with stakeholders before implementation.

The development also comes as regulators continue to examine ways of improving the Domestic Crude Supply Obligation framework. Recent data indicate that producers have become more responsive to domestic supply requirements, while long term crude supply agreements have helped improve the predictability of deliveries.

For Nigeria, the success of the proposed swap system could have implications beyond individual refineries. More efficient domestic crude allocation could reduce unnecessary transportation costs, improve refinery utilisation and support the country’s ambition of becoming less dependent on imported refined petroleum products.

The initiative will now depend on the outcome of consultations between producers, refiners and regulators, as well as the ability of stakeholders to agree on commercially workable terms.

If successfully implemented, the crude swap mechanism could provide another tool for ensuring that available Nigerian crude reaches domestic refineries more efficiently, strengthening the country’s refining sector and improving energy supply security.