Reforms Implemented By NNPC Limited Under Kyari Brings Decade -Long Crude Swap Deal To An End

…National Oil Company Commences Willing Buyer, Willing Seller Arrangement

The series of reforms currently being implemented by the Nigerian National Petroleum Company Limited in the oil and gas sector under the leadership of the Group Chief Executive Officer, Mele Kyari has ended the crude swap arrangement, THE WHISTLER can report.

THE WHISTLER understands that with the end of the crude swap arrangement, the NNPC Limited will begin the sale and purchase of crude oil at normal price.

Findings also revealed that selling crude at normal price and buying of the product at normal price will translate to enormous savings for the country.

This means that with the ending of crude swap contracts with traders, the NNPC Limited will not be exchanging crude oil for refined petroleum products, as the state-oil company will now make cash payments for petrol imports.

The NNPC Limited Group Chief Executive, Mele Kyari had while confirming the development in an interview said, “In the last four months, we practically terminated all DSDP contracts. And we now have an arm’s-length process where we can pay cash for the imports.

“This is the first time NNPC has said it is terminating crude swap contracts. By importing less gasoline as private companies import the bulk, NNPC will be able to pay for its purchases in cash.”

This is the first time in almost a decade that the NNPC Limited has stopped the crude oil swap arrangement for petrol and begun utilising cash tenders to purchase fuel.

This shift, which is in accordance with President Bola Tinubu’s reform initiatives launched in May, aims to eliminate costly fuel subsidies and strengthen Africa’s largest oil-exporting nation’s financial stability

Findings revealed that the state-owned oil company made this substantial adjustment in its most recent tender for acquiring petrol planned for delivery in November

While Nigeria produces more oil than any other African country, it refines little and relies nearly entirely on petroleum imports to keep its 200 million people moving.

More than a dozen consortia participated in the most recent round of swaps, including multinational oil dealers such as Vitol, TotalEnergies, and Mercuria, as well as local firms such as Sahara.

The measures currently being implemented by the Nigerian National Petroleum Company Limited to tackle crude oil theft and pipeline vandalism has made the Nigerian oil and gas industry to achieve its highest crude oil and condensate output in nearly 18 months, with a production of 1.72 million barrels of crude and condensate.

This improvement is the result of months of collaboration with operators to co-create unique solutions to peculiar challenges, mainly evacuation issues faced by individual operators, stakeholder management, political will, and support from government institutions.

Data from the NNPC Limited showed that as of 25th of September 2023, the Nigerian oil and gas industry achieved its highest crude oil and condensate output in nearly 18 months, with a production of 1.72 million barrels of crude and condensate.

This improvement, it was gathered, is directly attributable to the reopening of operations along corridors with a history of security challenges, the restart of production from facilities that have been shut down for extended periods due to evacuation challenges, the completion of Turn Around Maintenance (TAM) of some assets, completion, and hook-up of infill wells, and critical NEPL well intervention projects.

In September 2023 alone, ABO TAM was completed, while ESSO-operated offshore Assets (Erha & Usan) recorded significant gains.

Similarly, the old and new Kolo Creek Trunklines were reopened, while production was restarted into the Okodia-Rumuekpe line (Zone 7) effectively enabling the recommencement of production from the SPDC East Assets including Nun-River and Kolo Creek.

Also, AITEO Exploration and Production, NNPC Eighteen Operating Limited, Heirs Energies Limited, Total Energies (OML 58 & 102) and Mobil (Etim & Inim) all ramped up production in September 2023, contributing sizeable volumes to Nigeria’s national output.

These improvements, combined with prevailing crude oil, have significantly improved the overall mood of the industry, with operators able to meet their obligations to contractors and a line of sight to healthy returns on investments.

The NNPC Ltd, it was learnt, has also been consistent and timely in meeting its cash call obligations with the much-improved production output.