224 Firms Submit Bids for 2017 Crude Term Contracts

• India, Indonesia, Thailand now top destinations for Nigeria’s oil
Chineme Okafor in Abuja
The Nigerian National Petroleum Corporation (NNPC) yesterday disclosed that 224 companies have submitted bids to lift its crude oil over the next 12 calendar months, starting from February 2017.

The corporation also stated that contrary to speculations that crude oil of Nigeria’s origin were finding it difficult to get buyers in the international market, the country’s oil grades were still the most sought-after among refiners in Europe and other users in far east Asian countries.

Indicating that the United States, its previous top customer, was beginning to look towards the country again for crude oil supplies, NNPC said Nigeria’s top customers are now India, Indonesia and Thailand.

Bonny light, Qua Iboe, Brass River, and Forcados crude oil are some of Nigeria’s most sought-after crude oil grades in the market.

Speaking at the opening of the bids at its headquarters in Abuja, the Group Managing Director of the NNPC, Dr. Maikanti Baru, stated that the list dropped from 278 that applied for the contract in 2015 because the corporation introduced some new requirements that must be met by bidders.
According to him, refiners and big crude oil lifters will be given priority consideration in the process which he noted wouldbe concluded in February 2017.

He explained that about 700,000 barrels per day (bpd) of oil which include Joint Venture (JV) and Production Sharing Contracts (PSC) volumes would be put out for lifting within the term.
“It marks the beginning of the 2016 and 2017 term contracts for Nigerian crude oil under the NNPC on behalf of the people and government of Nigeria,” said Baru.

He stated that “when we sell this crude oil, the money goes straight to the Central Bank of Nigeria (CBN) account on behalf of the federation. NNPC does not operate any of those accounts.
“The best inputs from the NNPC is confirmation that the money has been paid but we have no signature rights on this account, contrary to the perception that NNPC is hoarding some money on behalf of the Nigerian people, all the crude oil that we sell goes to the Nigerian people. There is nothing that is hidden, it is all open for everybody to see.”

Baru said on the volumes to be sold: “It is the volumes that we get from our JV operations that is about 600,000 barrels per day. We also have somewhere in the region of 100,000 barrels per day in terms of royalty and tax oils that is from the PSC operations, these are the kinds of volumes we are expecting next year.”

On the number of companies that will emerge from the exercise as well as their expected capacities, he said: “That will be decided on actual production forecast around February next year when the tenders are supposed to come in, however, last year, we had about 27 companies that were selected.

“Essentially, we are targeting refiners and big traders as well as companies that have made substantial investment in the oil and gas industry, particularly in the downstream sector.”

Baru said about reported downturn in demands for Nigeria’s crude oil grade, “There had been speculation that we are struggling for market. That is not quite true. Nigerian crude oil has continued to earn premiums and is hot cakes all over for refiners because of its light nature which gives very high yields, so our crude oil continues to maintain markets.

“In fact, contrary to speculations that a lot of Nigerian crude goes to China, they don’t, most of them are consumed in India and Europe, particularly this year and last year, most of Nigerian crude oil ended up in Europe.”

Speaking further in this regards, the General Manager, Crude Oil Marketing Division of NNPC, Melee Kyari said: “Only one confirmed crude oil cargo got to China last year. Most of our production ends up in Europe and far east Asia. India, Indonesia and Thailand are our major buyers and of course, there are changes in the market that is bringing the US back to us.”

Kyari also said the corporation had in planning for the term contract, factored in the plans of its customers to improve the reliability of supplies from it.
He also cautioned potential customers against fraudsters claiming to have oil term contracts with NNPC.
According to him. “We don’t do spot allocation; NNPC stopped selling crude on spot market for over 15 years, so anyone coming to tell you about spot sales is a liar.

“Outside this towers, we have not delegated anyone to discuss crude oil business with the public; other than our Duke Oil which is in London, there is no other office of NNPC that deals with crude oil.”

He also said NNPC will factor into its contract, the global downturn in oil production and price volatility.

Some of the bidders include Northwest Petroleum Limited, Delma Nigeria Limited, Green and Green Petrochemicals, Forte Oil, Nisen Investment Limited, CMCO Nigeria Limited, Duke Oil, Acorn Petroleum, BP Oil International and North Oil and Coral Global.

Others are Calson Bermuda, Glencore Energy Services, Emadeb Energy Services Limited, Tamoil Overseas, Demure Energy Services Limited, Vitol SA, Ankor Oil and Emo oil Petrochemical, among others.