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LONDON, NOVEMBER 1, 2018 - Nigeria's state oil firm NNPC said
on Thursday that it had signed a crude-for-product deal with BP
for the next six months to help meet the country's
gasoline needs over the holidays and ahead of its general
election early next year.
Despite being Africa's biggest oil producer and an OPEC
member, Nigeria is almost wholly reliant on fuel imports as its
refineries barely function after years of neglect and
infrastructure sabotage.
Periodic fuel shortages are common with cars lining up at
the pump sometimes for days, especially during the Christmas
period.
Incumbent President Muhammadu Buhari, whose popularity is
already sagging, cannot afford to be seen as unable to meet the
needs of Nigeria's 190-million population.
It was not immediately clear what volume would be allocated
to BP. NNPC already has 10 similar deals for a total of just
over 300,000 barrels per day of crude out its close to 1.9
million bpd of production as of October.
NNPC initially announced on Twitter late on Wednesday
without providing details. BP declined to comment.
In its statement, NNPC said the arrangement with BP would
account for 20 percent of the west African country's total
gasoline needs.
NNPC imports about 70 percent of Nigeria's fuel needs,
mainly gasoline, via swap contracts known as Direct Sale Direct
Purchase (DSDP).
Foreign firms must pair up with a local company to deliver
the products. NNPC said that BP will be partnered with Nigerian
firm AYM Shafa.
BP was not originally among the companies with whom NNPC
signed DSDPs.
"BP's partnership with AYM Shafa...makes it a perfect fit
for our plans to ensure that there is adequate supply of
products throughout the coming Yuletide and even beyond the
election period," NNPC managing director Maikanti Baru said,
adding that AYM Shafa has 150 retail outlets and depots.
The existing contract holders that include trading houses
Vitol, Trafigura, Mercuria and French oil major Total
started in mid-2017.
NNPC extended the existing DSDP contracts to June 2019 but
several trading sources in the consortiums have requested new
price terms, sources with direct knowledge said.
Higher oil prices this year have helped boost Nigeria's
foreign exchange reserves, but the weakness in the country's
currency against the U.S. dollar has forced the central bank to
spend billions to keep the naira stable and prevent an unwelcome
spike in its import bill.
Nigeria has been using swaps for about 10 years. NNPC
launched the DSDP model in 2016 and under it, NNPC sells crude
oil to refiners or trading houses, who in return, supply mainly
gasoline but also other petroleum products such as diesel.
Trader/Refin Local partner(s) Volume (minimum
ery expected)
Trafigura AA Rano 33,000 bpd
Petrocam Rainoil/Falcon Crest 33,000 bpd
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
Total Total 33,000 bpd
10 Groupings 330,000 bpd
