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NNPC extends $6bn oil swap contracts by 6 months

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Oge Obi with agency report

Few months to the expiration of the National Petroleum Corporation’s () 2018 crude-for-oil products contracts worth about $6 billion, the Corporation has again extended the oil swap deals by another six months – to June 2019.

Quoting unnamed sources, Reuters reported that the Corporation has extended the contracts – which serves as a major avenue for Nigeria in meeting up with her need to end in June 2019.

The NNPC’s crude swap deals, which were previously referred to as offshore processing agreements () and crude-for-products exchange arrangements, are now known as Direct Sale-Direct Purchase Agreements ().

Under the deals, the NNPC supplies crude oil to selected local and international oil traders and refineries in exchange for petrol and .

The deals, which had expired by the end of July 2018, were extended until the end of this year.

In May 2017, the Corporation 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.

The crude oil 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 Group Managing Director of the corporation, , had previously announced an extension for the expiry of the deals to the end of this year.

A 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 facilities have been underperforming for years, making Nigeria totally 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.

Unlike the 2016 contracts, which included only companies with refineries so as to cut out middlemen, the beneficiaries of 2017 contracts include international trading houses, and not just refineries.

However, under the current deals, each of the selected 10 oil traders/refineries partnered local Nigerian companies to win 33,000 barrels per day allocations.

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