The Nigerian National Petroleum Corporation (NNPC) says that it may be signing crude-for-product deals with two oil giants, Shell and ExxonMobil. The NNPC had last week signed a similar deal with BP.
The Chief Operating Officer, Upstream of the NNPC, Mr. Bello Rabiu, said on the sidelines of an African oil and gas conference in Cape Town, South Africa that 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”.
The NNPC imports about 70 percent of the nation’s fuel needs, mainly petrol, via swap contracts. The corporation has contracts, known as direct sale direct purchase agreements, with 10 consortiums, including trading houses Vitol, Trafigura, Mercuria and Total.
It extended the existing contracts to June 2019, but several trading sources in the consortiums said they had requested new price terms.
The report by Nigeria’s Punch newspaper on Tuesday quoted Rabiu as saying that the NNPC hoped in 2019 to emulate savings of around $1bn seen in 2016 with its crude-for-product swaps, which would likely end once the nation’s refineries were revamped.
“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,” he said.
The report added that the NNPC was in the final stages of talks with consortiums, including top traders, energy majors and oil services companies to revamp its long-neglected oil refineries in an effort to reduce its reliance on imported fuel.
“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,” Rabiu said.