NNPC Releases Guidelines for 2019 Crude Oil Swap Contract

Chineme Okafor in Abuja

The Nigerian National Petroleum Corporation (NNPC) Wednesday unveiled the guidelines for its crude oil-for-product swap programme, known as the Direct Sale and Direct Purchase (DSDP) scheme.

The corporation in a tweet message on its official twitter handle @NNPCgroup, disclosed that it will engage qualified refineries, oil traders, as well as local downstream operators in the 2019 DSDP programme.

NNPC did not state the volume of crude oil it would put into the DSDP programme but usually allocates 445,000 barrels of oil a day from Nigeria’s daily production figures to take care of the country’s daily products consumption. This volume is also often used by it in its crude oil for product swap programmes, including the DSDP.

According to the corporation, the invitation of participants in the swap contract was in line with Nigeria’s public contract and procurement law – the Public Procurement Act 2007, as well as its policy and procedures on same.
It said the decision to engage qualified and credible companies in the DSDP programme was to ensure sustained product supply in the country.

The corporation added that the programme would deliver monthly crude oil lifting on Free on Board (FOB) basis to suppliers who shall in return deliver petroleum products of Nigerian standard specification to it on Delivered at Place (DAP) basis, at designated safe ports in Nigeria.

NNPC equally stated that the petroleum products to be delivered shall be equivalent in value to the crude oil received from it by the suppliers.

NNPC described the company that will be eligible to participate in the swap scheme, as: “An established international end user who owns a refinery with the capacity to process Nigerian crude oil grades and has a Nigerian affiliate or subsidiary experienced in downstream oil and gas business or in partnership with an experienced Nigerian company engaged in downstream oil and gas business particularly petroleum products trading.

“An established and globally recognised large volume petroleum product trading company and has a Nigerian affiliate or subsidiary experienced in downstream oil and gas business or in partnership with an experienced Nigerian company engaged in downstream oil and gas business particularly petroleum products trading.”
It also added that: “An Indigenous company engaged in Nigerian oil and gas downstream activities with trading of petroleum product expertise,” would be allowed to participate.

The duration of the swap contract, it said, would be for a 12 calendar month, that is, between 2019 and 2020.
It said participating companies must provide legal evidence of their existence; tax clearance; compliance with Nigeria’s pension law; the country’s social insurance law; as well as registration on the Bureau of Public Procurement (BPP’s) National Data Base of Federal Contractors, Consultants and Service Providers (NDCCSPs).

With regards to financial requirements, it said: “Minimum turnover of $500 million (or the naira equivalent) and net worth of $250 million (or the naira equivalent) for the year 2017 or 2018 whichever is the current financial year.”

It added that foreign companies applying shall be required to demonstrate evidence of partnership with experienced Nigerian downstream company that meets a minimum turnover of $65 million and net worth of $32.5 million, while indigenous companies shall meet the minimum turnover of $400 million and net worth of $200 million.