Estimated Reading Time: <1
Nigeria’s National Petroleum Corporation, NNPC said on Tuesday it had cancelled bidding for new crude oil swap agreements and will instead directly sell crude oil to refiners, and purchase refined oil products from them.
State oil company NNPC said in a statement that the move was “designed to enshrine transparency and eliminate the activities of middlemen” in the swap scheme.
NNPC had shortlisted 44 companies for the swap agreements for 2016, also called “offshore processing arrangements” (OPAs), but said most of them did not directly operate refineries.
Getting oil products from such companies, NNPC said, would “constitute a significant value loss” for the country.
“Only bona fide owners of refineries identified in the ongoing OPA tender evaluation process will be further engaged,” NNPC said in the statement.
Oil-rich Nigeria is reliant on imported gasoline, kerosene and other petroleum products. In addition to the swap arrangement, it also relies on an import subsidy scheme that is itself fraud-ridden and expensive.
Efforts to revamp its own long-neglected refineries this year have met with limited success.
NNPC is currently relying on interim swap agreements made in September after it cancelled the original 2015 deals because they were “skewed in favour of the companies.”
The current swap agreement partners are NNPC trading subsidiary Duke Oil, an NNPC joint-venture called Calson, which is with Swiss trader Vitol, and another called Napoil, which is with commodities trader Trafigura.
Sources told Reuters that a non-incorporated joint venture between oil major BP and Nigermed Ltd was involved in such a deal and that Duke Oil’s agreement would be done through Sahara Group.
Of these, Vitol, through Varo Energy, and BP directly operate refineries.
Other companies that put in bids for OPA agreements and have direct links to refineries include Litasco, Eni, Cepsa, Totsa, Essar, Saras and Eneos.