By Radarr Africa Business Desk
LAGOS, October 27 (Radarr Africa) – Nigeria’s upstream regulator is weighing a crude swap framework that could cut about $3 to $4 from the cost of each barrel supplied to local refineries, BusinessDay reported.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) is consulting producers, refiners and other stakeholders on a plan that would let refiners receive crude from the nearest suitable production or export point, instead of having their allocated grade moved over long distances, the newspaper said. The proposal is at the consultation stage. BusinessDay said the regulator gave no start date, no details of the obligations on producers and refiners, and no indication of who would pay for arranging the swaps.
The plan was outlined by Prosper Omonedo, assistant director for operations at NUPRC, who spoke in place of chief executive Oritsemeyiwa Eyesan at the OTL Africa Downstream Energy Week in Lagos, according to BusinessDay. Omonedo credited recent talks for better delivery to refineries in the second and third quarters. “We engaged producers and refiners,” he said.
BusinessDay reported that local refineries received more than 127 million barrels of crude and condensate between January and September 2026. First-quarter deliveries fell short, hurt by commercial disputes between producers and refiners that the NUPRC had to mediate. Second-quarter deliveries rose to 53.7 million barrels, or 97.4 per cent of allocated volumes. Third-quarter deliveries were 45.1 million barrels, or 76.2 per cent of allocation. The newspaper said the regulator did not explain the drop in the third quarter.
On output, BusinessDay said crude and condensate production averaged 1.717 million barrels per day in September, up 2.34 per cent from August. Crude oil alone averaged 1.53 million barrels per day. It was the fifth straight month in which the industry met or exceeded its quota, the paper reported.
The swap proposal sits alongside the Domestic Crude Supply Obligation, which requires crude to be offered to local refineries before it is exported. BusinessDay said the allocation rests on Section 109 of the Petroleum Industry Act 2021. The newspaper cautioned that the value of any swap would depend on how crude grades are matched, how price differences between streams are settled and whether producers accept the terms.
The idea is not new. ThisDay reported on August 17 that NUPRC chief executive Oritsemeyiwa Eyesan said talks on the proposed crude swap were at an early stage. “We just agree on a swap arrangement,” she said, describing how companies would avoid moving crude from one end of the country to the other. ThisDay said producers with domestic supply obligations could exchange obligations based on where their crude is located and how close other suppliers are to domestic buyers, settling through a netting mechanism. It said the gas component would be coordinated with the Gas Aggregation Company of Nigeria, and that the stated goals were lower logistics costs, better feedstock supply for local refineries and improved compliance with the crude and gas supply obligations.
Hydrocarbon Processing reported on August 12 that the Crude Oil Refinery-owners Association of Nigeria (CORAN) expected changes to crude allocation and pricing rules to be discussed in a regulator-led review. CORAN spokesperson Eche Idoko said a direct-delivery proposal “could be a win-win for both the producers and refiners.” The report said Dangote has argued that Nigeria’s pricing structure adds $3 to $4 per barrel to refiners’ feedstock costs because purchases are routed through producers’ trading arms, and that a NUPRC official said the ideas were “on the table,” mainly at the urging of inland refiners.
Omonedo also addressed licensing and development targets, BusinessDay reported. The 2026 Licensing Round has 40 blocks on offer, with bids to be scored against published criteria and bidders required to disclose their beneficial owners. Twenty-two recent awardees under the commission’s drill-or-drop approach are expected to produce at least 250,000 barrels per day within five years, the paper said.
The commission also remains committed to the Domestic Gas Delivery Obligation and plans to coordinate with the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) on refinery demand and crude supply, BusinessDay reported.
Crude theft and pipeline damage have long weighed on output in Africa’s largest oil producer, the newspaper noted.
