The Nigerian National Petroleum Corporation (NNPC) plans to halt in the next few years the practice of awarding crude oil lifting contracts to companies other than its trading arm, a senior official of the firm said.
NNPC, as part of efforts to widen its customer reach, intends to give more crude to its trading subsidiary Duke Oil to directly market Nigeria’s crude in the next few years.
Energy news provider, S&P Global Platts quoted NNPC’s Group General Manager, Crude Oil Marketing Division (COMD), Mr. Mele Kyari, to have said this in an interview on the sidelines of the Annual Asia Pacific Petroleum Conference (APPEC) conference in Singapore.
“There is a plan to see how Duke Oil can directly trade the volumes in the market (up to 80%) and ultimately 100% of our equity in the long term,” Kyari said.
NNPC normally allocates majority of its crude cargoes to trading companies and oil refiners that hold yearly term contracts.
These cargoes are then sold by the trading companies to end-users, refiners and other buyers.
In January 2017, the corporation awarded its 2017-18 crude oil sales involving the export of around 1.3 million barrels per day (b/d) to 39 companies. While Duke Oil got 90,000 b/d the other 38 companies on the list had a 30,000 b/d allocation.
But this practice has been heavily criticized as susceptible to corruption.
India, the largest buyer of Nigerian oil, has always pushed for the NNPC to directly market its crude to ensure its largest buyers have secure supplies, and stop using trading companies and other intermediaries.
Kyari hinted in the interview that NNPC was moving in the same direction as the state-owned companies of Saudi Aramco and Angola’s Sonangol.
Analysts have said this system would be more transparent and benefit buyers and sellers.
Kyari also said that as part of its efforts to attract new buyers, NNPC will make sure grades were “appropriately priced” and also focus on ensuring supply stability, which was a key issue.