NNPC favours local firms in crude lifting contracts

The Nigerian National Petroleum Corporation (NNPC) has made good its decision to favour local firms over foreign counterparts while expanding the list of companies for the yearly crude oil term lifting contracts for 2014 and 2015.

The contract has now been expanded to about $52 billion worth of crude oil, up from $40 billion in the April list following what trade sources said was intense lobbying by disappointed buyers.

The initial list released in April showed that 21 contracts were awarded to Nigerian companies while foreign companies got seven. In this new list, from a total of 43 contracts, 28 winners are Nigerian firms, while foreign firms — such as Chinese state refiner, Sinopec and India’s state-owned refiner, Indian Oil Corporation — won 15.

Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, had explained that the award of contract to indigenous companies to lift crude oil was to encourage effective local participation in the industry.

She said the decision was a deliberate policy of the federal government to encourage Nigerians to participate in the oil and gas sector of the economy.

Of the 8 newly-added Nigerian companies, only 3 were awarded contracts in the last round, while deals with neighbouring West African countries like Senegal, Burkina Faso and Ivory Coast were not renewed.

As was the case with the first list, no contracts were issued directly to global traders Glencore, Vitol, Trafigura or Gunvor. However, industry sources revealed that these firms would likely still trade Nigerian oil, either through buying from Nigerian firms or through partnerships.

Nigeria, Africa’s largest oil producer, will award around 482 million barrels of its oil for one year, starting from June 2014, with companies receiving about 30,000 barrels per day (bpd) during this period.

The total contracted volume is expected to be around 1.32 million bpd, the expanded list showed — or about 70 per cent of Nigeria’s total crude oil exports, which fluctuate between 1.8-1.9 million bpd.

A total number of 43 companies have obtained permit for the yearly crude oil lifting contract, as against the 50 contracts given out by the NNPC in 2012; however, it is yet to be ascertained whether the new list entitled is final.