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Oil Prices Shoot Up On Large Inventory Draw

Oil Prices Shoot Up On Large Inventory Draw

Oil prices rose on Wednesday…

Nigeria's NNPC Could Ink Oil Swap Deals With Two More Supermajors

NNPC gas station

Nigeria’s state oil company is mulling over the signing of two more oil swap deals, with Exxon and Shell, after last week it sealed an oil-for-products deal with BP, Reuters reports, quoting NNPC’s chief operating officer for upstream, Bello Rabiu.

“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,” Rabiu said.

Last week, Nigerian media reported that NNPC had signed a six-month oil swap deal with BP that would see subsidiary BP Oil International Limited provide NNPC with 20 percent of the gasoline it needs.

Nigeria has four refineries with a combined capacity of 445,000 bpd, as per S&P Global Platts figures, but the inefficient refineries in need of upgrades and revamps are unable to meet domestic fuel demand, so Nigeria has to import gasoline.

In fact, the state oil company has to import as much as 70 percent of the fuel the country consumes and most of it is gasoline. To that end, it has direct sale direct purchase contracts with 10 consortia, Reuters reports, which include the top oil traders in the world such as Vitol, Trafigura, and Mercuria, as well as French Total.

Yet the oil-for-product deals, however many of them NNPC ends up agreeing, will not become a permanent fixture of the company’s operations, according to Rabiu.

“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 told Reuters.

For now, the existing contracts with commodity traders were extended to mid-2019, but Reuters cited sources from the consortia as saying they had requested new price terms from the NNPC.

By Irina Slav for Oilprice.com

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