MOSCOW (MRC) -- Nigeria's state oil firm NNPC could sign crude-for-product deals with Shell and ExxonMobil, similar to one signed with BP last week, reported Reuters with reference to a senior NNPC official's statement.
Nigerian National Petroleum Corporation (NNPC) announced last Wednesday that it had signed such a deal with BP and would provide more details later.
"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," NNPC’s chief operating officer for upstream, Bello Rabiu, told Reuters on the sidelines of an African oil and gas conference in Cape Town.
NNPC imports about 70 percent of Nigeria's fuel needs, mainly gasoline, via swap contracts. NNPC has contracts, known as direct sale direct purchase agreements, with 10 consortiums that include trading houses Vitol, Trafigura , Mercuria and Total.
It extended the existing contracts to June 2019 but several trading sources in the consortiums said they had requested new price terms.
Rabiu said NNPC hoped in 2019 to emulate savings of around USD1 billion seen in 2016 with its crude-for-product swaps, which he said would likely end once Africa's top crude producer revamps its refineries.
"If our refineries are back, which we want in the next 18 months, this thing will stop. So, all these things are just stop-gap measures, but the key issue is that we wanted to import at the least cost before our refineries come back onstream," he said.
NNPC is in the final stages of talks with consortiums including top traders, energy majors and oil services 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," Rabiu said.
As MRC wrote before, in March 2016, Royal Dutch Shell Plc was lining up assets for a USD30 billion divestment program that may extend from the US and Trinidad to India following its record takeover of BG Group Plc.
Royal Dutch Shell, commonly known as Shell, is an Anglo–Dutch multinational oil and gas company headquartered in the Netherlands and incorporated in the United Kingdom.Created by the merger of Royal Dutch Petroleum and UK-based Shell Transport & Trading, it is the fourth largest company in the world as of 2014, in terms of revenue, and one of the six oil and gas "supermajors".
ExxonMobil is the largest non-government owned company in the energy industry and produces about 3% of the world's oil and about 2% of the world's energy.