The Nigerian National Petroleum Corporation (NNPC) has been reported to have extended its crude-for-product swap contracts, the country’s main avenue to meet the bulk of its fuel needs, until June 2019
Reuters reported that the extension of the swap contracts, known also as Direct Sale Direct Purchase, was coming despite Nigeria’s refining capacity of about 445,000 barrels per day.
It noted however the optimization of the refining capacity had been constrained by the plants’ underperformance over the years, thereby making the country almost wholly dependent on imports to meet its domestic petroleum products needs.
Currently, Nigeria’s gasoline consumption is roughly 40 million litres per day in the nation of almost 200 million people.
Nigeria, Africa’s biggest oil producer, became increasingly reliant on NNPC for fuel imports via swaps after a currency devaluation and recession in the last few years, which edged independent importers out of the spot market.
Reuters claimed that efforts to get any comment from a spokesman for NNPC did not yield result.
NNPC’s swap contracts currently account for about 70 percent of the country’s imports while 30 percent is done through the spot market, one of the sources added.
The swap contracts came into effect in July last year and were due to end after one year. They were already extended once earlier this year to December.
NNPC paired up foreign trading firms with local partners to do the swaps.
NNPC is separately in advanced discussions with some of the swap contract holders to invest in rehabilitating its refineries.
Reuters quoted unconfirmed sources as saying that two consortia were picked earlier this year but that fine-tuning the financing of the projects has been slow.
