The Nigerian National Petroleum Corporation on Thursday announced the cancellation of the Offshore Processing Agreements entered Into in January 2015, with three companies namely, Duke Oil Company Inc., Aiteo Energy Resources Limited and Sahara Energy Resources Limited.
The deal, initiated by the Jonathan administration, saw the NNPC allocate 210,000 barrels per day of crude oil to offshore locations in exchange for petroleum products at a pre-agreed yield pattern.
Spokesman to president Muhammadu Buhari, Femi Adeshina, told Reuters “Mr. President has approved the cancellation of the oil swap contracts. Mr. President has publicly expressed his displeasure over this oil swap deal.
The NNPC asserts that the current OPA is channeled in favour of the companies such that the value of the product delivered is of low quality. But the country has not dropped the whole idea of oil swap but it plans to look into the terminated contract and provide a better structure for the agreement.
In the meantime, the NNPC has commenced the process of establishing an alternative OPA based on optimum yield pattern. “After due appraisal of performance trajectory, we have invited Messrs. Oando, Sahara Energy, Calson, MRS, Duke Oil, BP/Nigermed and Total Trading to bid for the new Offshore Processing Agreement while we have engaged AITEO, Sahara Energy and Duke Oil to exit the current OPA,’’ the NNPC stated.
The Corporation also announced the cancelation of the current contract for delivery of crude oil to the nation’s refineries in Warri, Port Harcourt and Kaduna. The NNPC stressed that it resorted to the delivery of crude oil to refineries by marine vessels following continuous attacks by vandals on oil pipelines.
According to a statement issued by Ohi Alegbe, group general manager, group public affairs division, NNPC, the corporation said, “We have also commenced a rigorous and transparent process of securing capable and competitive contractors for the delivery of crude oil by marine vessels to Port Harcourt and Warri/Kaduna Refineries pending the restoration of the Crude Pipeline infrastructure”.
The NNPC stated that it has obtained permission from President Buhari to commence the proposed process for the 2015/2016 crude oil term contract for the evacuation of Nigeria’s crude oil equity from the various crude and condensate production arrangements. However, NNPC expound that the new measures were aimed at cost reduction and strengthening of operational efficiency across its value chain.