By Elizabeth Chukwuma
For months, there had been rumour making the rounds that the Nigerian National Petroleum Corporation , NNPC, has concluded arrangement to select a new set of Companies that would participate in the 2019 /2020 Contracts for the exchange of Crude Oil for Offshore refined petroleum products.
The rumour became pronounced when the Corporation under the current Management led by Mele Kolo Kyari, has a strong background in Crude Oil Marketing, opened up a tender process Comprising of both the technical and Commercial bid submission at the instance of President Muhammadu Buhari who had earlier cancelled the old Offshore arrangement of Oil –Swap deal in August 2015, for lack of transparency. The Katsina born Nigerian President was said to have replaced it with direct sale and direct purchase Agreement. Note that this is currently what is in use in the country
.Between 2010 and 2014, under the Administration of former President Goodluck Jonathan, the country was said to have lost Petroleum Products in excess of $35 bilion. Anthony Ayine, Auditor General of the Fedration had emphaisised in his report to the Presidency that the sum of $16 billion was lost in 2014 alone.
It was not surprising why the President has to rejig the process of the sale of the nation’s Crude Oil and Oil Swap deal with the Contract terms of the Offshore refineries to block areas of leakage which NNPC officials and their foreign Collaborators had used over the years to shortchange the government.
Ndu Ughamadu, the Corpration, General Manager, Public Affairs Department, in a Statement had disclosed that the technical and Commercial bid submission for the bidding process was quickly followed with the evaluation of the Companies and shortlisting those to be invited for further negotiations with the government Oil Corporation.
Note that the Nigeria n Extractive Transparency initiative, , NETI, had been at the vanguard calling for the cancellation of the Oil Swap deals describing it as not being Cost effective, particular , when compared to product prices and proceeds paid into the Corporation Accounts by the Companies. More worrisome was the report of the Auditor General which had uncovered under-delivery of products by the Companies awarded the Contracts to the tune of $866.189 million, which comprises the refined products exchange arrangement of $500.075 million and the Offshore processing arrangement of $366.114 million . The situation was so bad that NETI called on the government to allocate the crudes to the refineries based on their current prevailing Capacity and sell the difference directly as Crude to the Offshore refineries.
Insiders had informed the Magazine that the oil exchanges originates from the fact that the countries at Port Harcourt, Rivers state, Warri , Delta state and Kaduna, Kaduna state, were producing below installed Capacity . The fallout was that since 2003, the Corporation has continued to allocate the offshore refineries its 445,000 barrels per day allocation from the joint venture Companies, JVC.
The Value News learnt that based on the Commercial negotiation with the shortlisted Companies that bided to market NNPC Crude Oil allocation, the successful Consortia and Companies were selected in a very transparent manner: They would do the Oil business with NNPC, between October 2019 and September 2020 and in return supply refined Petroleum Products to the country.
According to Ughmadu, the selected Companies were fifteen in number. They are BP International ltd/AYM SHAFA ltd, Vitol SA/ calson/HYSON, TOTSA Total Oil Trading, SA/Total Nigeria pl, Gunvor International BV/AYM, Maikifi Oil and Gas Co, ltd, Trafigura PTE ltd/A.A.RANO Nigeria ltd and CEPSA SA.U/Mocoh Nigeria ltd.
Others are Litasco SA/Britania –U Nig ltd/ Freepoint Commodities, Mrs Oil and Gas Company ltd, SaharaEnergy Resource ltd, Bono Energy ltd/Beterna plc/ Arkleen Oil and Gas and /Amazon Energy. This is in addition to Matrix Energy ltd/Petratlantic Energy ltd/UTM Offshore ltd/Levene Energy Development ltd , Mercuria Energy Trading SA/ Barbedos OIL and Gas services ltd/ RainOil ltd/PETROGAS Energy, Asian Oil & Gas PTE ltd/Eyrie Energy ltd/MastersEnergy Oil & Gas ltd /CASIVA ltd, ,Duke Oil Company Incorporated and CEPSA SA.U/OANDO plc.
NNPC may have created the impression that only fifteen Companies were selected in the bidding process but about 36 Companies were said to have made the list going by the Collapsing of the Companies into 15 groupings. The Corporation may have opted to give more Companies opportunity in the one year Contracts for the DSDP because of old business relationship. Many of the trading Companies, particular, the foreign firms, were said to have supported the Oil behemoth when most of the Offshore refineries were not willing to do business with it as a result of non- fulfillment of its Contractual Agreement.
Many had expected NNPC to announce the quantity of Crude Oil each of the Companies selected under the Direct Sale of Crude Oil and Direct Purchase of petroleum products arrangement , DSDP, are expected to lift for refining overseas. The Corporation may have kept it a closely guided secret to avoid giving Nigerians room to be Calculating how its Crude allocation of 445,000 barrels from the JVC are shared to the Oil Trading Companies and the refined petroleum products supplied in return and the amount that ought to have accrued to the country.
