Nigeria finalises $6bn crude oil deal with 10 firms –NNPC

Nigeria is on the verge of signing a $6 billion deal with 10 companies for crude oil exchange for refined products to take off by July 1 2017.

The Nigeria National Petroleum Corporation (NNPC) on Thursday, said that the contract terms will see at least 300,000 barrels per day (bpd) of crude oil being swapped for imported gasoline and diesel and other products.

A senior NNPC official told Reuters that the deal, which is a review of similar contract signed in the first quarter of 2016 will accommodate only three of the firms which participated in the previous exercise.

Already, four of the 10 groups have reportedly finished the signing formalities, while the rest were expected to do same on or before Monday.

The NNPC, which is due to give its final approval said the deal would this time seek to have zero tolerance to fuel with higher sulphur.

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“We are workibg towards having no toxic petroleum products as we are switching over to higher quality, lower-sulphur fuels that will create less toxic fumes,” the official said.

Nigeria, with four state owned refineries, none of which can produce to half their full capacity relies on imported gasoline, kerosene and other petroleum products.

Sulphur levels were a major sticking point in the negotiations with the companies as the Ministry of Environment and the Standards
Organization of Nigeria were said to be insisting that all imported fuel from the swap arrangement must meet international standard of 1,500 ppm for prime motor spirit (fuel) and 500 ppm for diesel.

The list of companies contains several companies from 2016, including Varo Energy, Societe Ivorienne de Raffinage (SIR), Total and Cepsa.

While Italy’s ENI and India’s Essar, which won 2016 were absent from this year’s list, Socar and Mercuria are new additions.

NNPC has been forced to increase its fuel imports to around 80 percent of Nigeria’s consumption, as the independent marketers cry of scarcity of dollars haven affected their businesses.

 

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