NNPC Extends $6bn Oil Swap Contracts By 6 Months

There are indications that the Nigeria National Petroleum Corporation (NNPC) may have extended its crude for oil products contracts worth about $6 billion by another six months, from the end of 2018 to June 2019.

According to Reuters, quoting unnamed sources, the Corporation is separately in advanced discussions with some of the swap contract holders to invest in rehabilitating its refineries.

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.

NNPC's swap contracts currently account for about 70 percent of Nigeria's imports while 30 percent is done through the spot market, one of the sources added.

The swap contracts came into effect in July last year and were due to end after one year, by June 2018.

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.

Despite having a refining capacity of about 445,000 barrels per day, NNPC's plants have been underperforming for years, making Nigeria wholly dependent on imports to meet its domestic petrol and diesel needs. Statistics show that the country's fuel consumption is roughly 40 million litres per day. 

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