A senior official at Nigeria’s state-oil firm, Nigerian National Petroleum Corporation (NNPC) said the firm could sign crude-for-product deals with Shell and ExxonMobil, similar to one signed with BP.
On the sidelines of an African oil and gas conference in Cape Town, Bello Rabiu, NNPC’s chief operating officer for upstream said “unfortunately, 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”.
NNPC announced it had signed a crude swap deal with BP on October 31, 2018. The state-oil firm imports about 70 percent of Nigeria’s fuel needs, mainly gasoline through swap contracts. Currently, NNPC has contracts known as direct sale direct purchase agreements, with 10 consortiums that include trading houses Vitol, Trafigura, Mercuria and Total.
The contracts have been extended to June 2019, but several trading sources in the consortiums said they had requested new price terms.
Rabiu said the NNPC is working towards saving about $1billion with its crude-for-product swaps in 2019, as this had been successfully implemented in 2016. He however noted the deals will end once the country revamps its refineries.
According to Rabiu, “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 onstream”.
In an effort to reduce its reliance on imported fuel, NNPC is in the final stages of talks with consortiums including top traders, energy majors and oil services companies to revamp its long-neglected oil refineries.
Rabiu said “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”.