Nigeria concludes fresh N450b oil refining deals with foreign firms

NIGERIA has concluded deals to exchange crude oil for refined products with commodities trader and Amsterdam, Holland-based Trafigura; and Ivorian refiner- SIR, that will cover nearly half of the country’s fuel imports.
The two deals, which were for two years, were worth about $3 billion (N450 billion), will cover nearly half monthly oil product imports, approximately seven to nine cargoes or around 300,000 tonnes.
Cote d’Ivoire’s SIR refinery recently took a $98.37 million loan from Groupe Banque Atlantique to buy crude oil.
SIR Finance Director, Edouard Oulai, said that the 80,000 barrel-per-day plant- Cote d’Ivoire’s sole fully functional refinery, has been having trouble buying crude oil since February and is currently running at about 80 percent of capacity.
Trafigura is the world’s third largest independent oil trader and the second largest independent trader in the non-ferrous market, with access to approximately $20 billion in credit facilities and investments in industrial assets around the world of more than $1.5 billion.
It currently has in excess of $1 billion in assets in the various resource funds that are managed by Galena Asset Management, its wholly owned subsidiary.
According to trade sources, Trafigura has agreed a yearly contract with Nigerian National Petroleum Corporation (NNPC) to buy 60,000 barrels per day (bpd) of crude oil in exchange for products such as gasoline and gas oil of the equivalent value.
The deal is worth around $2 billion, based on the current Brent crude oil price of $91 a barrel.
Trafigura’s deliveries are likely to amount to around five to six standard size gasoline cargoes a month or around 200,000 tonnes following the deal, two traders said.
The source said that NNPC also signed a contract to sell Ivorian refiner SIR 30,000 bpd of crude oil processed offshore, in exchange for oil products sourced from a refinery in the nearby Ivory Coast. This amounts to between two to three gasoline cargoes a month.
“Nigeria needs three or four crude swap deals to cover their import requirements and then they will completely stop. These two cover almost half of import requirements,” gasoline trader based in Lagos, said.
News of the supply contracts, is believed to have coincided with a decision by the Petroleum Product Pricing and Regulatory Authory (PPPRA) to stop subsidising marketers buying fuels from Noble Group, in a move likely to marginalise one of the country’s top suppliers.
Typically, NNPC organises imports through quarterly tenders but ongoing delays in payments have prompted some suppliers to seek other ways of supplying Africa’s most populous country.
SOURCE:ngrguardiannews.com