There are indications that the inability of the country’s refineries to meet domestic demand for petroleum products may have affected the Nigerian National Petroleum Corporation, NNPC, projected annual revenue savings of $1 billion.
Accordingly, the Corporation hopes that in 2020 it would copy the measures taken to realize the savings of around $1 billion seen in 2016 with its crude-for-product swaps strategy.
Speaking on the sidelines of the African oil and gas conference in Cape Town, Chief Operating Officer for NNPC Upstream, Bello Rabiu, said that the crude-for-product swaps would likely end once Nigeria revamps its refineries.
Rabiu said, “NNPC hopes in 2019 to emulate savings of around $1 billion seen in 2016 with its crude-for-product swaps, which would likely end once Nigeria revamps its refineries. If our refineries are back, which we want in the next 18 months, this thing will stop. So, all these are just stop-gap measures, but the key issue is that we wanted to import at the least cost before our refineries come back on-stream.”
He said that the NNPC is in the final stages of talks with consortiums including top traders, energy majors and oil servicing companies to revamp its long-neglected oil refineries in an effort to reduce its reliance on imported fuel.
“It is on track and I believe if we don’t sign a final deal (on the project to upgrade refineries) this month of November we will surely sign in December.”
He added that the Corporation was in progress to sign crude-for-product deals with Shell and ExxonMobil, as part of moves to ensure increased domestic supply in Nigeria, similar to one signed with BP last week
Recall that the NNPC had last week announced that it signed such deal with BP, adding, “Unfortunately, Shell and ExxonMobil exited the downstream sector in Nigeria a couple of years ago but they are coming back for this particular arrangement, because it’s an opportunity for them to get crude and sell their products to the refineries.”