Nigeria's NNPC says Shell, ExxonMobil also looking at crude swaps

Mercuria Holdings

05/11/2018 11:00

By Wendell Roelf
    CAPE TOWN, Nov 5 (Reuters) - Nigeria's state oil firm NNPC
could sign crude-for-product deals with Shell  RDSa.AS  and
ExxonMobil  XOM.N , similar to one signed with BP  BP.L  last
week, a senior NNPC official said on Monday.   
    Nigerian National Petroleum Corporation (NNPC) announced
last Wednesday that it had signed such a deal with BP and would
provide more details later.  urn:newsml:reuters.com:*:nL8N1XC31Y
    "Unfortunately, Shell and ExxonMobil exited the downstream
sector in Nigeria a couple of years ago but they are coming back
for this particular arrangement, because it’s an opportunity for
them to get crude and sell their products to the refineries,"
NNPC’s chief operating officer for upstream, Bello Rabiu, told
Reuters on the sidelines of an African oil and gas conference in
Cape Town.
    NNPC imports about 70 percent of Nigeria's fuel needs,
mainly gasoline, via swap contracts. NNPC has contracts, known
as direct sale direct purchase agreements, with 10 consortiums
that include trading houses Vitol  VITOLV.UL , Trafigura
 TRAFGF.UL , Mercuria and Total  TOTF.PA .
    It extended the existing contracts to June 2019 but several
trading sources in the consortiums said they had requested new
price terms.  urn:newsml:reuters.com:*:nL8N1WY3CC
    Rabiu said NNPC hoped in 2019 to emulate savings of around
$1 billion seen in 2016 with its crude-for-product swaps, which
he said would likely end once Africa's top crude producer
revamps its refineries.  urn:newsml:reuters.com:*:nL8N1QV40X
    "If our refineries are back, which we want in the next 18
months, this thing will stop. So, all these things are just
stop-gap measures, but the key issue is that we wanted to import
at the least cost before our refineries come back onstream," he
said.
    NNPC is in the final stages of talks with consortiums
including top traders, energy majors and oil services companies
to revamp its long-neglected oil refineries in an effort to
reduce its reliance on imported fuel.
    "It is on track and I believe if we don't sign a final deal
(on the project to upgrade refineries) this month of November we
will surely sign in December," Rabiu said.

 (Reporting by Wendell Roelf; Editing by Susan Fenton)
 ((wendell.roelf@thomsonreuters.com; +27 21 461 3523;))