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Domestic Companies To Get A Larger Slice Of Nigeria’s Oil Pie

Nigeria

Contracts for crude oil production in Nigeria for the 2017 term will be awarded in the middle of December, according to a source from the Nigerian National Petroleum Corp.

"The crude tender will close on November 24 and we expect to have new contracts in place before the end of the second week of December," Mele Kyari, a senior level official in charge of crude oil marketing at the NNPC said in a statement released on Wednesday.

The contracts, which include deals to distribute and refine crude, encompass 1.17 million barrels per day of Nigerian oil exports – more than half of the west African country’s 2.2 million bpd of production.

Earlier this quarter, the national petroleum company released the requirements for a successful bid for one-year oil lifting contracts beginning on January 1st. All documents must be in by November 24th, the NNPC’s announcement states.

This year’s contracts have been distributed between 27 foreign and domestic firms, according to S&P Platts, but this year’s tenders are more likely to be awarded to Nigerian companies, analysts say.

"We could also see domestic Nigerian companies getting a larger slice of the pie," an oil analyst based in Lagos told Platts.

Related: Could Trump’s Victory Render OPEC’s Output Deal Irrelevant?

On Tuesday, news broke that the Niger Delta Avengers – the militant group that has been at the forefront of the oil-rich delta’s insurgency against Lagos for the inequitable distribution of wealth in the country – attacked the Trans Forcados pipeline for the third time in a week.

According to the NDA, the last bomb was a new warning to oil companies to stop repairing damaged oil infrastructure. The attacked line is operated by Shell.

Last week, militants had attacked the pipeline just two days after Trans Forcados, which feeds Shell’s 400,000-bpd export terminal, resumed operations following a July attack. That attack came just hours after Nigerian President Muhammadu Buhari had met with leaders in the Niger Delta to broker some kind of a peace agreement in the restive oil-rich region.

Zainab Calcuttawala for Oilprice.com

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