Nigeria: NNPC Invites Bidders for Repairs of Pipelines, Depots

12 August 2020

The Nigerian National Petroleum Corporation (NNPC) has invited investors to bid to fix pipelines and depots serving its oil refineries, according to a document posted on its website yesterday.

This is coming as the Agbami grade of crude oil is threatening Nigeria's full compliance to the OPEC+ deal as the oil grade is being treated as a condensate, which is exempted from the output cut agreement.

Reuters reported that built in the 1970s, the pipeline network is crucial to getting crude oil to NNPC's three refinery complexes, and moving the finished fuels to consumers.

But years of what NNPC described as "incessant" theft and vandalism, as well as simple ageing, have left the pipelines in need of extensive repairs.

The refineries themselves have run only sporadically, and NNPC shut them down earlier this year while they await repairs and upgrades.

It said yesterday that those projects would be handled separately.

Bidders for the projects would have to finance them independently and operate them for a "defined period" while they recovered investment costs, and were compensated for their work, with throughput tariffs, the document said.

It added that the new pipelines would need "intrusion detection" systems, in addition to deep burial, to stymie theft or vandalism. Submissions are due by September 18.

Meanwhile, the Agbami grade of crude oil is threatening Nigeria's full compliance to the OPEC+ deal as the oil grade is being treated as a condensate, which is exempted from the output cut agreement

Nigeria's full compliance to the OPEC+ deal hangs on a key oil grade being treated as a condensate.

Since OPEC+ allowed ultra-light oil to be exempt from its production cut deal, the West African nation's Agbami has been a bone of contention.

The challenge is that nobody from international oil companies to those that monitor OPEC output can agree on whether it should be classed as a crude or not.

Nigeria's oil ministry officials are asking international oil companies like Chevron and Equinor to reclassify Agbami as a condensate rather than crude, sources close to the matter said this week.

A representative at Nigeria's oil ministry confirmed Agbami as a condensate, saying the pressure volume temperature analysis characterisation of Agbami's reservoir fluids prove it is not a crude.

But the field's partners are not on the same page.

Chevron, which operates the Agbami field and FPSO, have always listed the grade as a crude on their website, and markets it as light, sweet crude oil to its customers.

Similarly, equity partner Equinor also classifies the grade as a light, sweet crude, according to its website.

Trading sources have told S&P Global Platts that the grade is marketed as a light, sweet crude, as it is not derived from a gas condensate field.

Lagos-based Famfa Oil, which also holds a stake in the oil field, has also termed it as a crude oil on its website.

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