Nigerian
oil company Nigerian National Petroleum (NNPC) is reportedly
considering crude-for-product deals with Shell and ExxonMobil.
The potential deal could be similar to NNPC’s agreement with
British firm BP last week, Reuters reported citing the former’s upstream
chief operating officer Bello Rabiu.
NNPC depends on foreign imports for the country’s fuel needs as it
buys 70% of the demand, especially gasoline, through swap deals with
overseas companies.
The national oil company signed such contracts with ten consortiums, including Vitol, Trafigura, Mercuria and Total.
Rabiu was quoted by the news agency as saying: “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.”
The company extended the existing contracts to June next year,
however, several trading sources in the consortiums have reportedly
sought new price terms.
Furthermore, Rabiu stated that the company aims to create savings of around $1bn, as achieved in 2016, during next year.
He further added that the existing arrangement of crude-for-product swaps could end once NNPC enhances its refineries.
Rabiu 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 on-stream.”
In a bid to reduce its dependence on fuel imports, the company has
been engaged in discussions with consortiums such as traders, energy
majors and oil services companies to improve its oil refineries. Talks
are said to be in the final stages and the company is expecting to reach
a deal by the end of this year.
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