Twenty-One Firms win Nigeria 2016 crude oil term contracts

 

 

Twenty-One Firms win Nigeria 2016 crude oil term contracts

Despite the highly hyped reforms in Nigeria’s oil export term contracts, Nigerian National Petroleum Corporation Thursday rolled out a new list of traders that would lift the country’s crude oil for sale in the international market in 2016.

The list nearly invalidates the claims by the corporation that is weeding out middlemen from the export programme and deal mainly with refiners and their representatives.

According to a statement from the spokesman of NNPC, Mr. Ohi Algebe, the beneficiaries of the term contracts are divided into five categories comprising refiners, foreign traders and indigenous traders. It also waters down the Nigerian Content value of the crude lifting business by conceding over 60 percent of the total volumes to foreign entities.

Before now, government had used crude lifting contracts to groom indigenous companies to participate in the lucrative crude oil export market by reserving substantial volumes of the commodity for local traders some of whom partner with foreign multinational traders in order to learn the trade routes and tricks.

However, the list rolled out by NNPC saw France's oil giant Total and international trading firms Trafigura and Vitol in the front line of the 21 companies handed crude oil term lifting contracts for 2016.

Other beneficiaries include India National Oil Company, Emirates National Oil Company, the trading arms of Shell and ExxonMobil, and indigenous trader Sahara Energy.

Mr. Alegbe said the term contracts were distributed in five categories -- international refineries, international oil traders, indigenous oil trading companies, affiliates of International Oil Companies, and downstream operators.

The current list compared with 46 companies handed contracts for the 2015 period, which expired in May.

But it was much bigger than a pruned down list of 16 that NNPC Chief Executive Emmanuel Kachikwu envisaged in August in a bid to instill transparency and probity in the award of contracts and the management of the country's oil resources.

NNPC said in August it would only consider companies for the lucrative contracts that showed proof of business integrity and were ready to sign an undertaking to comply strictly with Nigerian anti-corruption laws.

The 991,661 b/d of various Nigerian crude grades on offer this time around, which is about 47.2% of the country's current production of 2.1 million b/d, is also lower than the export of around 1.17 million b/d in previous contracts, reflecting the drop in the country's oil output.

A breakdown of the 2015/2016 crude oil term contract off-takers for the 991, 661 bpd Nigerian equity crude indicate that 240, 000 bpd representing 24 percent of the total volume on offer is awarded to four Refiners classified as major current receivers of Nigerian Crude with capacity to process all of Nigerian crude grades. The Off-takers in this category include: Emirates National Oil Coy, ENOC, Indian Oil Corporation, CEPSA Refinery Madrid and Sara SPA Refinery. Each of the Off-takers in this category was awarded 60, 000 bpd. 

Three notable International Trading Companies, namely Trafigura PT Ltd, Mercuria Energy Trading SA and Vitol SA won the bid for the lifting of 32, 000 bpd of crude based on their pedigree as large scale buyers of Nigerian Crude with structure for short term freight intervention and storage. The off-takers in this category represent about 10 percent of total crude volume on offer.

Trading Affiliates of International Oil Companies consisting of ENI Trading and Shipping SPA, TOTSA Total Oil Trading SA, Exxon Sale and Supply LLC and Shell Western Supply and Trading received term allocation of 32, 000 bpd each totaling 128, 000 bpd representing about 13 percent of total volume of crude oil on offer.

Nigerian downstream players with wide experience in crude trading and large asset base accounts for 405, 000 bpd representing about 41 percent of total crude volume on offer. In this category, Emo Oil & Petrochemical Coy/China Zhenhea- an NNPC long term trader is allocated 45, 000 bpd. Other off-takers in this category include: Northwest Petroleum and Gas Ltd, 45, 000 bpd,  Forte Oil, 45, 000 bpd, Oando PLC, 60, 000 bpd, Sahara Energy Resource Ltd, 60, 000 bpd,  A.A. Rano Nig. Ltd, 45, 000 bpd, Eterna Oil, 45, 000 bpd and MRS Oil &Gas Coy Ltd 60, 000 bpd.

NNPC Trading Companies Calson/Hyson 32, 000 bpd and Duke Oil Incorporated 90, 000 bpd account for combined off-take of 122, 000 bpd representing about 12 percent of total volume on offer.

Apart from ensuring transparency, the companies were carefully chosen based on their track records and trading experience to ensure that Nigerian crude cargoes are not left unsold.