The Nigerian National Petroleum Corporation (NNPC) is targeting about $1 billion from crude- for- product swap deals in 2019.
NNPC’s Chief Operating Officer for Upstream, Mr. Bello Rabiu, stated this on the sidelines of an African oil and gas conference in Cape Town, South Africa.
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).
The Corporation 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.
Rabiu said NNPC hoped in 2019 to emulate savings of around $1 billion seen in 2016 with its crude-for-product swaps, which he said would likely end once Africa’s top crude producer revamps its refineries.
“If our refineries are back, which we want in the next 18 months, this thing will stop. So, all these things are just stop-gap measures, but the key issue is that we wanted to import at the least cost before our refineries come back on-stream.
“It is on track and I believe if we don’t sign a final deal on the project to upgrade refineries this month of November we will surely sign in December,” he said.
Group Managing Director of the corporation, Dr. Maikanti Baru, had previously announced an extension for the expiry of the deals to the end of this year.
NNPC paired up foreign trading firms with local partners to do the swaps. The corporation is separately in advanced discussions with some of the swap contract holders to invest in rehabilitating its refineries. It was also gathered that two consortiums were picked earlier this year but ironing out the financing of the projects has been slow.
The list of the 10 DSDP groupings include: Trader/Refinery Local partner(s) Volume (minimum expected) Trafigura AA Rano 33,000 bpd; Petrocam Rainoil/Falcon 33,000 bpd; Crest Mocoh Heyden 33,000 bpd; Cepsa Oando 33,000 bpd; Sahara SIR 33,000 bpd; Mercuria Matrix/Rahmaniya 33,000 bpd; Socar Hyde 33,000 bpd; Litasco MRS 33,000 bpd; Vitol Varo 33,000 bpd; and Total 33,000.
Meanwhile, Nigeria’s state oil firm NNPC could sign crude-for-product deals with Shell and ExxonMobil, similar to one signed with BP last week, a senior NNPC official said on Monday.
NNPC had announced last Wednesday that it had signed such a deal with BP and would provide more details later.
“Unfortunately, Shell and ExxonMobil exited the downstream sector in Nigeria a couple of years ago but they are coming back for this particular arrangement, because it’s an opportunity for them to get crude and sell their products to the refineries,” Rabiu said
NNPC imports about 70 percent of Nigeria’s fuel needs, mainly gasoline, via swap contracts. It extended the existing contracts to June 2019 but several trading sources in the consortiums said they had requested new price terms.
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