Nigeria Swaps Crude for Products with Total, 3 Others
Nigeria through its, oil giant, NNPC, has formalized plans to swap crude oil for products with four multinationals, Total, Varo, Cepsa and ENI in 2016
Nigeria National Petroleum Corporation (NNPC), has concluded plans to enter into a new crude for oil products swap agreements with Total, Varo Energy, Cepsa and ENI, the company’s crude marketing unit disclosed yesterday.
The Federal government, through the NNPC, will engage the companies for the swap deal in February 2016.
The head of NNPC’s crude marketing unit, Mele Kyari said the government was deviating from the former “offshore processing” agreements as they are directly with refineries who can use the crude to produce the oil products the country needs..
NNPC’s head of corporate planning, Bello Rabiu, said there was no need to budget money for fuel subsidies in 2016, as the country can reduce the cost of imported fuel below the current retail price.
He noted that, “In the next 12 months, the price of oil will definitely not be high,” adding that “securing the pipeline systems, removing the corrupt issues and ensuring that we pay only for what we consume. If we can get all these stages done, that will eliminate any call for subsidy in the next few months.”
NNPC cancelled the initial bidding process for crude swap agreements in November, deciding to pick 14 refiners that could process the oil themselves in order to eliminate middlemen.
Varo Energy is a joint venture refining company between global oil trader Vitol and private equity firm Carlyle Group. Cepsa, ENI and Total are all integrated oil companies with refineries in Europe.
NNPC reached interim swap agreements in September with its trading subsidiary Duke Oil and NNPC joint-venture companies Calson, which is with Vitol, and Napoil, which is with commodities trader Trafigura.
These could be extended as NNPC works to finalise the details of the new swaps.