The Nigerian National Petroleum Corporation (NNPC) is in the final stage of signing $6 billion worth of deals to exchange more than 300,000 barrels per day (bpd) of crude oil for imported gasoline and diesel.
The contracts, which are coming three months later than expected – which include three more pairs of companies than last year – reflect Nigeria’s increased reliance on NNPC for fuel imports.
The African most populous country’s lack of local refining capacity means that it relies on imported petrol, kerosene and other petroleum products, while the oil price crash and militant attacks on Nigeria’s oil industry have starved independents of dollars for fuel imports.
At least four of the 10 groups have signed contracts, set to begin from July 1, with the rest expected to do so by Friday, Reuters news agency reports.
The fuel quality in the final agreements was not immediately clear, but July 1 is the same deadline the country set for switching over to higher quality, lower-sulphur fuels that create less toxic fumes.
According to Reuters, sources said the new standards would be applied. Others reported that three different gasoline specifications – 1,500 ppm, 500 ppm and 150 ppm – would all be included in the contracts, giving NNPC options on which to import.
This year’s deal includes international trading houses, not just oil refineries. The 2016 contracts included only companies with refineries in an effort to cut out middlemen.
The latest list contains several companies from 2016, including Varo Energy, Societe Ivorienne de Raffinage (SIR), Total and Cepsa. Italy’s ENI and India’s Essar, which won 2016 contracts, are absent from this year’s list, while Socar and Mercuria are new additions.
The contracts were initially planned to begin in April but last year’s swap deals were extended at least twice in order to give NNPC more time to negotiate. NNPC had previously said this year’s contracts would exchange up to 800,000 bpd of crude oil, though at some 40 percent of peak exports that target was seen by markets as unlikely.