Nigeria to cease crude oil swap agreements
ABUJA, February 3, 2016 – The Nigeria National Petroleum Corporation (NNPC) said Wednesday it would begin direct crude sales to refineries from March onwards, replacing the crude oil swap agreements in an effort to achieve savings of some USD 1 billion.
Henceforth using a direct-sale-direct-purchase arrangement, the new system will eliminate costs related to middlemen and give the NNPC greater control over the transactions. This in turn should also increase transparency.
Nigeria relies heavily on imports for its refined products consumption. On January 21, NNPC had to close two of its four refineries due to an uptick in militant activity in the Niger Delta. The Port Harcourt and Kaduna facilities, producing a combined total of 5.4 million litres of petrol per day, were subject to operational shutdown, the company said at the time.
Both refineries already faced several months of inactivity in 2015. The most recent shutdown is estimated to cost the government USD 2.4 million per day, according to Nigerian power minister Babatunde Fashola.
For more oil and gas news and features on Nigeria, click here.