NNPC terminates Diezani’s associates’ contracts

The Nigerian National Petroleum Corporation (NNPC) has terminated offshore processing agreements (OPAs) with associates of Diezani Alison-Madueke, former minister of petroleum resources.

One of them is, however, allowed to re-apply under a “fair” arrangement now in place following the invitation for fresh bids by the corporation.

The OPAs were awarded to Aiteo Energy Resources Limited and Sahara Energy Resources (Nig) Ltd in January 2015 after the discontinuation of the highly controversial crude swap agreement with foreign refineries.

Aiteo is owned by Benny Peters while Sahara was co-founded by Tonye Cole, who serves as the group CEO. Both were very close to the former petroleum minister and were among the most favoured for government patronage throughout her tenure.

Duke Oil, a subsidiary of NNPC which trades in crude oil, has also had its OPA cancelled.

According to NNPC, the cancellations were done because the value of products delivered is “significantly” lower than the equivalent crude oil allocated for the programme.

Under the OPA, the companies were allocated a total of 210,000 barrels of crude oil per day for refining at offshore locations in exchange for petroleum products at pre-agreed yield pattern.

Questions have often been raised over the actual value of the petroleum products Nigeria is getting from the programme, with fears that dozens of byproducts were never taken into consideration.

Ohi Alegbe, the NNPC spokesman, said in a statement on Wednesday that “after detailed appraisal of the operation and its terms of agreement, the NNPC is convinced that the current OPA is skewed in favour of the companies such that the value of product delivered is significantly lower than the equivalent crude oil allocated for the programme”.

He said the NNPC also observed that the structure of the agreement “does not guarantee unimpeded supply of petroleum products as delivery terms were not optimal”.

The NNPC has now commenced the process of establishing alternative OPA based on optimum yield pattern with tender processing fees.

“After due appraisal of performance trajectory, we have invited Messrs. Oando, Sahara Energy, Calson, MRS, Duke Oil, BP/Nigermed and Total Trading to bid for the new Offshore Processing Agreement while we have engaged AITEO, Sahara Energy and Duke Oil to exit the current OPA,” he said.

On the status of the crude swap entered into by the NNPC and some oil traders, he said the last arrangement lapsed in December 2014 and was never renewed.

Meanwhile, President Muhammadu Buhari has given NNPC the go-ahead to kick-start the tendering process for the 2015/2016 crude oil term contract for the evacuation of Nigeria’s oil equity from the various crude and condensate production arrangements.

The process is expected to commence with the advertisement of the contracts in both national and international print media for a period of one month.

“This has been carefully structured to weed out ‘briefcase companies’ and rent seekers,” Alegbe said.

As part of its cost-cutting measures, NNPC has also cancelled the contracts for the delivery of crude oil to the nation’s refineries in Warri, Port Harcourt and Kaduna “after due evaluation” because of “exorbitant cost and inappropriate process of engagement”.

As a stop-gap measure, NIDAS Marine Limited, a subsidiary of the NNPC, has been engaged to provide crude delivery service on negotiated industry standard rate pending the establishment of substantive contract.

“We have also commenced a rigorous and transparent process of securing capable and competitive contractors for the delivery of crude oil by marine vessels to Port Harcourt and Warri/Kaduna Refineries pending the restoration of the Crude Pipeline infrastructure,’’ Alegbe said.

The NNPC explained that it resorted to the delivery of crude oil to the refineries by marine vessels following incessant attacks on the Bonny-Port Harcourt refinery pipeline and the Escravos crude pipelines by vandals and oil thieves resulting in the complete unavailability of the pipelines in 2013.