The NNPCL made this known on Tuesday, July 4, 2023, its before and after fuel subsidy fact sheet shared via its official account on Twitter.
Affirmatively the national oil company said, “Before – NNPC Limited pays suppliers either cash or delivers the equal value of crude oil volumes as settlement, but After(now) – Crude oil swap deals will phase out.”
A source working with the national oil company informed our correspondent that NNPCL aims to provide an equivalent value of crude oil volume as compensation for its market share, as it is struggling with capital to run its operations.
EnergyDay gathered that the DSDP (Direct Sale Direct Purchase) agreement was a scheme introduced by NNPC in which oil companies lift crude oil and bring in the same value in refined products.
Further checks showed that during the administration of Goodluck Jonathan 25% of the 445,000 barrels were allocated to local refining, while the balance was swapped with the consortium.
However, NNPC under the former President Mohammadu Buhari’s administration swapped 100% of crude oil per day to a consortium of foreign and local trading firms in exchange for imported petrol.
EnergyDay gathered that the management of Mele Kyari, the Group Managing Director of now defunct NNPC, who is now the Group CEO of NNPCL initiated the crude to product contract in 2019 and ended it in September 2020.
The NNPC renegotiated the second phase which ended in September 2021 and entered another deal with 16 consortia for one year starting in August 2021 third phase by arrangement should have terminated by September 2022, but subsisted up till June 2023.
While the NNPC as of June 2023, claimed it is winding down these crude swap contracts with traders and will pay cash for gasoline imports instead, the fact sheet by the national oil company leaves many Nigerians in doubt.
As of the period of filing this report, the exact figures and terms of reference that NNPCL had with the consortiums in respect of the DSDP arrangement, remain a secret, while the national oil company was alleged to have swapped over 364.5 million barrels of crude oil worth $25.9 billion in the last three years and five months.
For the first time since 2016, Mele Kyari, in a recent report said the national oil company has practically terminated all DSDP contracts in the last four months, adding that the company now has an arm’s-length process where it can pay cash for the imports.
The NNPCL source said that the proposition by the GCEO does not suggest that it has sufficient funds to fund its petroleum product importation amidst humongous debt it is faced with.
BP and Vitol, two international oil trading companies told Reuters that the NNPCL is owing about $3 billion to trading houses and oil majors for crude oil swap arrangements.
Source from the two companies informed Reuters that the swaps will ultimately stop but not yet , adding that they are getting the swaps crude cargo in October at the earliest.
President Ahmed Tinubu, as part of measure to ensure that the local refineries are fully functional in the next few months, has reportedly instructed NNPC Limited to terminate all Crude Oil Swap Contracts, as most of the crude oil will now go to the four refineries.
The national oil company is by the directed, expected to settle cash for petrol imports, after July, 2023, but this remains doubtful.
Checks by EnergyDay however revealed that NNPC Limited with its bad credit rating coupled with debt to oil trade running into about $3 billion and dilapidated refineries is likely to struggle to raise needed capital to guarantee energy security and supply its retail stations and other stakeholders.
In another development, the NNPCL in its latest quarterly report published on Monday failed to meet its self-imposed deadline for the launch of its initial public offering (IPO), despite promising to do so by mid-year 2023, has shown.
Kyari recently committed an error in reporting the profit before tax of the NNPC when he stated that the profit was N687 trillion on a national broadcast, which was later clarified by the NNPC that the correct profit-after-tax (PAT) for 2021 was N674 billion. The mistake in the announcement was described as “inadvertent”.