The Nigerian refinery sector has entered a transformative phase with the recent launch of the 650,000 barrels per day Dangote refinery, the expansion of modular refineries across the country and the recent issuance of refinery construction and operation licences. These significant events herald Nigeria’s move toward refining self-sufficiency and a potential end to the import of refined petroleum products. However, this boost in domestic refining capacity comes with a corresponding demand for increased crude oil supply to feed these refineries. The Petroleum Industry Act (PIA) in anticipation already embodies provisions requiring upstream crude producers to deliver specified volumes to domestic refineries — a requirement known as Domestic Crude Supply Obligation (DCSO).
In this article, we have explored the regulatory framework for DCSO, its implications for upstream producers and refiners, and the potential impact on Nigeria’s petroleum industry generally.
