NNPC mulls crude swaps deals with Shell, ExxonMobil

NNPC, others yet to remit $22.06bn, to Federation Account - NEITI

The Nigerian National Petroleum Corporation (NNPC) on Monday said it could sign crude-for-product deals with Shell and ExxonMobil, similar to one signed with BP last week.

The state oil company had announced last Wednesday that it signed such a deal with BP and would provide more details later.

“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’s Chief Operating Officer,Upstream, Bello Rabiu, told Reuters on the sidelines of an African oil and gas conference in Cape Town.

The corporation imports about 70 percent of Nigeria’s fuel needs, mainly petrol, via swap contracts. It has contracts, known as direct sale direct purchase agreements, with 10 consortiums that include trading houses TTrafigura, Mercuria, Vitol and Total.

NNPC extended the existing contracts to June 2019 but several trading sources in the consortiums said they had requested new price terms.

Rabiu said NNPC hoped in 2019 to emulate savings of around $1 billion seen in 2016 with its crude-for-product swaps, which he said would likely end once Africa’s top crude producer revamps its refineries.

He said, “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.”

“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.”

The corporation 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 in an effort to reduce its reliance on imported fuel.

..