Friday 20th October, 2017
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NNPC finalising $6bn worth of oil-for-product swaps

NNPC finalising $6bn worth of oil-for-product swaps

The Nigerian National Pe­troleum Corporation (NNPC) is in the final stage of signing $6 billion worth of deals to exchange 330,000 bar­rels per day (bpd) of crude oil for imported premium motor spirit (petrol) and diesel, internation­al news agency Reuters reported yesterday.
 
The contracts, which come three months later than expect­ed, include three more pairs of companies than last year, reflect­ing Nigeria’s increased reliance on NNPC for fuel imports.
 
A lack of local refining ca­pacity means Nigeria is reliant on imported gasoline, kerosene and other petroleum products, and 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, the sources said.
 
The 10 companies approved for the deal are: Trafigura AA Rano 33,000 bpd; Petrocam Rainoil/Falcon 33,000 bpd; Crest Mocoh Heyden 33,000 bpd; Cepsa Oan­do 33,000 bpd, Sahara SIR 33,000 bpd; Mercuria Matrix/Rahmani­ya 33,000 bpd, Socar Hyde 33,000 bpd, Litasco MRS 33,000 bpd; Vi­tol Varo 33,000 bpd and Total To­tal 33,000 bpd.
 
The NNPC, which is due to approve them by the end of the week, did not immediately re­spond to a request for comment.
 
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.
 
Sulphur levels were a major sticking point in the negotiations. The Ministry of Environment and the Standards Organization of Nigeria, the body responsible for setting requirements for im­ported goods, promised a switch to 150 ppm gasoline and 50 ppm diesel.
 
Some 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. (Reuters)

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