NNPC hands out oil contracts, talks up LNG

10 January 2017, Week 01, Issue 671

Nigerian National Petroleum Corp. (NNPC) has dished out contracts to 39 companies for crude oil offtake in 2017-18, the company announced on January 4. The head of NNPC’s crude oil marketing division, Mele Kyari, said the contracts cover 12 allocations and would be effective as of January 1, 2017. 

Winners include 18 Nigerian companies, 11 traders, five foreign refiners, three government-backed companies and two trading units of NNPC. All of the contracts are for 32,000 bpd, apart from NNPC’s Panama-registered Duke Oil unit, which won a deal for 90,000 bpd. Companies submitted 224 bids for NNPC’s oil over the period. 

The company has made progress in making more transparent awards of lifting contracts, in line with assurances from NNPC’s group managing director, Maikanti Baru.  

 

Exports

NNPC, at the end of December, talked up its determination to proceed with two new LNG projects in the country, Brass LNG and OK LNG. The company described them as high priority ventures. Baru said there was a challenge with trying to time the market for the projects “which we are reviewing on a monthly basis. Once the appropriate market window opens up, we will quickly get more shareholders to join us for the projects.” 

A meeting on Brass LNG is due to take place early this year on the project. This plan seems more likely to make progress than the OK LNG development, but the priority for NNPC is likely to be shoring up domestic supplies – rather than expensive new greenfield export plans. Repeating the success of Nigeria LNG (NLNG) would be attractive but prospects for such investments look challenging for now. 

 

NEITI

The Nigerian Extractive Industries Transparency Initiative (NEITI) published the results of its scrutiny of NNPC’s 2014 results on December 30, raising a number of areas of concern that have been flagged up in the past. One of the areas of significance was that the dividend paid by NLNG to NNPC, of US$1.42 billion for 2014, had not been transferred to the government. This marked the fourteenth year that NNPC has not paid the dividend, which now totals US$15.8 billion. 

While the publication of the NEITI report is a positive step, in terms of shedding light on the flow of funds from Nigeria’s oil and gas sector, the statement from the group said that “most of the remedial issues flagged in previous NEITI audits remain unresolved”. As such, it called on various participants to demand reforms and hold governments and companies to account. 

Edited by

Ed Reed

Editor

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