NNPC extends crude oil swap contracts for refined products by 6-month
Despite its deregulations of the downstream sector of the petroleum industry, the Nigerian National Petroleum Corporation (NNPC) has extended for another six months contracts for private refineries abroad to lift crude oil in exchange for refined products for domestic use.
Nigeria in March took the advantage of the sharp fall in the global crude oil prices due to the outbreak of the Coronavirus pandemic to remove subsidy on domestic consumption of petrol and announced the deregulations of the sector, ending years of corrupt-laden payment of subsidy to marketers and importers of fuel
Crude oil swap has been a measure adopted by the state-owned oil company to ensure the flow of refined petroleum products in the domestic market since the four state-run refineries are in comatose and have not been able to produce the refined product to meet local consumption.
The initial one-year contracts to exchange more than 300,000 barrels per day (bpd) with 15 company pairings were due to expire in October, according to a Reuters report.
The sources said the companies renegotiated the price agreement due to changes to fuel prices in Nigeria.
The contracts supply a large portion of Nigeria’s gasoline, and some of its diesel and jet fuel, as it has not been profitable for private importers to bring in fuel.
NNPC subsidiary, PPMC still sets an ex-depot price for fuels imported by NNPC. This, combined with dollar shortages, has thus far made it difficult for some importers to bring in fuels outside the contracts.