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Oil Inches Higher On Strong Crude Draw

Oil Inches Higher On Strong Crude Draw

Oil prices rebounded on Wednesday…

Nigerian NNPC Seeks Up To $5B Cash-for-Oil Deals With Traders

oil tanker

The Nigerian National Petroleum Corporation (NNPC) is aiming to strike up to US$5 billion worth of cash-for-crude prepayment deals with some of the biggest global oil traders, in a bid to raise funds for oil and gas exploration and production projects, Reuters reported on Wednesday, citing sources with direct knowledge of the talks.

According to Reuters’ sources, NNPC has hired Standard Chartered as advisor to the deals, and several weeks ago a request for proposals was issued seeking a loan of between US$3.5 billion and US$5 billion that would be repaid in crude oil over five to seven years.

NNPC and the parties involved in the deals are expected to make a decision on the cash-for-oil prepayment by the end of 2017. Seven commodity traders—including the industry’s biggest Vitol, Glencore, and Trafigura—are still in the race to get the deals.

According to one of Reuters’ sources, Nigeria—currently exempt from the OPEC cuts—is looking to strike deals with three firms to lift oil in exchange for 70,000 bpd of crude oil.

Last year, Vitol expanded its presence in Nigeria, by acquiring a stake in the downstream operations of local energy group Oando. In addition, Vitol, alongside Trafigura, is among the major commodity traders that are working with Nigeria under a crude-for-refined-products swap deal.

Nigeria’s economy—highly dependent on oil revenues—suffered a blow when oil prices collapsed in 2014. On top of that, militant attacks on oil infrastructure crippled its production last year to the point of Nigeria easily winning exemption from OPEC’s production cuts. State firm NNPC has been lagging behind payments for its interests in joint ventures with the oil majors operating in Nigeria—Shell, Total, Eni, Chevron, and ExxonMobil.

In December last year, Nigeria signed a deal to repay US$5.1 billion worth of dues to the five supermajors over five years. The oil majors had lowered the original amount Nigeria owed by US$1.7 billion, from US$6.8 billion, Oil Minister Emmanuel Ibe Kachikwu said at the time.

By Tsvetana Paraskova for Oilprice.com

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