19 October 2018

Nigeria: Again, NNPC Extends $6bn Oil Swap Contracts to June 2019

Photo: Premium Times
NNPC towers.

Barely four months after the Nigerian National Petroleum Corporation (NNPC) rolled over its crude-for- oil products contracts worth about $6 billion by six months until the end of the 2018, the state-run oil firm has extended the oil swap deals by another six months to June 2019.

This is coming as the federal government and oil workers have pledged not to do anything that would disrupt petroleum products supply during next year's general elections.

NNPC's crude swap deals, which were previously referred to as offshore crude oil processing agreements (OPAs) and crude-for-products exchange arrangements, are now known as Direct Sale-Direct Purchase Agreements (DSDP).

Under the deals, the NNPC supplies crude oil to selected local and international oil traders and refineries in exchange for petrol and diesel.

NNPC had in May 2017, signed the deals with local and international traders to exchange about 330,000 barrels per day (bpd) of crude oil for imported petrol and diesel, as part of measures to sustain the supply of petroleum products across the country.

However, the deals, which expired by the end of July 2018, were extended until the end of this year.

But quoting sources familiar with the swap contracts, Reuters reported that the NNPC has extended contracts, the country's main avenue to meet the bulk of its petrol needs, until June 2019.

Spokesman of NNPC, Mr. Ndu Ughamadu, did not respond immediately when contacted by THISDAY through calls and text messages.

Unlike the 2016 contracts, which included only companies with refineries so as to cut out middlemen, the beneficiaries of 2017 contracts include international trading houses, and not just refineries.

Under the current deals, each of the selected 10 oil traders/refineries partnered local Nigerian companies to win 33,000 barrels per day allocations.

According to the list, Trafigura partnered AA Rano to clinch 33,000 barrels per day; Petrocam paired with Rainoil and Falcon Crest to win 33,000 bpd; Mocoh partnered Heyden Petroleum to get 33,000 bpd; Cepsa paired with Oando to win 33,000 bpd; while Sahara is partnering Societe Ivorienne de Raffinage (SIR) for 33,000 bpd.

Five other groups that also got 33,000 bpd each include: Mercuria and Matrix/Rahamanniya; Socar and Hyde; Litaso and MRS; Vitol and Varo; and Total, which is partnering its Nigerian downstream subsidiary, Total Nigeria Plc.

Some of the companies that also benefitted in the current contracts include Varo Energy, Societe Ivorienne de Raffinage (SIR), Total and Cepsa.

Meanwhile, the federal government and oil workers have pledged not to disrupt petroleum products supply during next year's general elections.

In his speech yesterday at the Petroleum and Natural Gas Senior Staff Association of Nigeria's (PENGASSAN) 40th anniversary in Abuja, President Muhammadu Buhari said the federal government welcomed the assurances from oil workers to maintain peace in the oil sector as part of their sacrifice for the smooth conduct of next year's election.

The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, who read the president's speech, said Buhari had mandated that everything possible be done to ensure stability and peace in the downstream sector.

On its part, PENGASSAN has dismissed a report that it had issued a strike notice.

In a statement yesterday, the senior oil workers, stated that though it listed some of the challenges besetting the oil sector, at no time did it issue any strike notice to the government, instead, it said, it appealed to the federal, states, the Nigeria Employers Consultative Association (NECA) and organised labour to put a machinery in place to resolve some of the outstanding issues.

"As a responsible trade union with the interest of the masses and the Nigerian nation at heart, we will always work towards the growth and development of the country. We will not embark on any action that will inflict suffering on the Nigerian people," PENGASSAN said.

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