President Muhammadu Buhari yesterday took his fight against corruption in Nigeria’s oil industry to big-time traders in the sector, especially those involved in crude oil delivery and owners of refineries abroad.
The President specifically cancelled all contracts for crude oil delivery to the three refineries in Warri, Port Harcourt and Kaduna. His axe also fell on companies involved in offshore refining in exchange for petroleum products at pre-agreed yield pattern.
Through the Nigerian National Petroleum Corporation, NNPC, Buhari said the new measures were aimed at cost reduction and strengthening of operational efficiency across the organisation’s value chain. In a statement issued by NNPC Group General Manager, Group Public Affairs, Mr. Ohi Alegbe, he said that after proper evaluation and in line with the terms of contract for the delivery of crude oil to the nation’s refineries in Warri, Port Harcourt and Kaduna, the Federal Government has cancelled the current contract due to huge costs and inappropriate processes of engagement. NNPC disclosed that as a stop-gap measure, NIDAS Marine Limited, a subsidiary of the corporation had been engaged to provide crude delivery service on negotiated industry standard rate pending the establishment of substantive contract.
Alegbe said: “We have also commenced a rigorous and transparent process of securing capable and competitive contractors for the delivery of crude oil by marine vessels to Port Harcourt and Warri/Kaduna Refineries pending the restoration of the crude pipeline infrastructure.”
The corporation further explained that it opted for the delivery of crude oil to the refineries by marine vessels following incessant attacks on the Bonny-Port Harcourt Refinery pipeline and the Escravos crude pipelines by vandals and oil thieves resulting in the complete unavailability of the pipelines in 2013.
The government also announced the termination of the Offshore Processing Agreements, OPAs, entered into in January 2015 with Duke Oil Company Inc., Aiteo Energy Resources Limited and Sahara Energy Resources (Nig) Ltd. Under the arrangement, the NNPC allocates a 210, 000 barrels of crude oil daily for refining at offshore locations in exchange for petroleum products at pre-agreed yield pattern.
According to the NNPC, after a detailed appraisal of the operation and its terms of agreement, it is convinced that the current agreement is skewed in favour of the companies, such that the value of product delivered is significantly lower than the equivalent crude oil allocated for the programme.
Alegbe added that the structure of the agreement does not guarantee unimpeded supply of petroleum products as delivery terms were not optimal, adding that to address these lapses, the NNPC informed that it has commenced the process of establishing alternative OPA based on optimum yield pattern with tender processing fees.
“After due appraisal of performance trajectory, we have invited Messrs. Oando, Sahara Energy, Calson, MRS, Duke Oil, BP/Nigermed and Total Trading to bid for the new Offshore Processing Agreement while we have engaged AITEO, Sahara Energy and Duke Oil to exit the current OPA,’’ the NNPC stated.
On the status of the crude-for-product exchange agreement, SWAP, reportedly entered into by the NNPC and some oil traders, the corporation said that the last SWAP arrangement lapsed in December 2014 and was never renewed. The NNPC also informed that it has obtained the permission of President Muhammadu Buhari to start the tendering process for the 2015/2016 Crude Oil Term Contract for the evacuation of Nigeria’s crude oil equity from the various crude and condensate production arrangements.
The corporation noted that the process which would commence with the advertisement of the Crude Oil Term contract in both national and international print media for a period of one month, has been carefully structured to weed out “briefcase companies” and rent seekers.
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