Oil majors and the world's biggest commodity traders were among the winners of Nigeria's annual swap deals tender for crude offtake and delivery of refined oil products.
The Nigerian National Petroleum Corporation (NNPC)-the state oil firm of OPEC's African member-said on Sunday that it awarded crude-for-fuel swap deals to 15 consortia and/or companies.
Units of BP and Total, as well as commodity traders Vitol, Gunvor, Trafigura, and Mercuria, were awarded contracts, most of them in consortia with local Nigerian firms.
The contracts in the so-called Direct Sale of Crude Oil and Direct Purchase of Petroleum Products (DSDP) arrangement will run for a year effective October 1, 2019, through September 30, 2020.
"Under the DSDP arrangement, the under listed fifteen (15) consortia/companies shall over the contract period, offtake crude oil and in return, deliver corresponding petroleum products of equivalent value to NNPC, subject to the terms of the agreement," NNPC said in the statement.
At the end of last year, NNPC was looking to sign more oil swap deals as it is reliant on fuel imports despite being Africa's largest oil producer in OPEC. Nigerian refineries are in need of investment and upgrade and they often don't work at full capacity. At the moment, Nigeria imports almost all of the fuel it consumes.
The country will need refining capacity of 1.52 million bpd in order to meet its fuel demand by 2025, according to NNPC.
The reality is that Nigeria currently has operating refineries with a total processing capacity of 445,000 bpd and it often struggles to keep them at full-capacity operation because of underinvestment in maintenance. The country aims to triple the refining capacity by 2025 in order to move closer to becoming self-reliant in fuels.
According to NNPC, the 650,000-bpd refinery that Africa's richest man Aliko Dangote is financing will secure most of the refinery capacity increase. However, the refinery may not reach full capacity until the middle of 2020, which would be some one and a half years later than the originally planned startup date.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More
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