The Nigerian National Petroleum Corporation (NNPC) has approved 26 foreign and Nigerian companies and 12 countries to lift the country’s crude oil within the next two years.
The crude oil lifting term contracts which are expected to run from 2021 through 2023, would operate on a Government-to-Government (G2G) basis and allow selected companies and countries to purchase the commodity from the state-owned oil company.
However, in the fresh crude oil term agreements, it was observed that the names of majority of the companies involved in the DSDP deal also appeared in the list of those picked by the national oil company for the crude term contracts.
The selected companies include Sahara Energy Resources Limited, Oando, Duke Oil (an NNPC subsidiary), AA Rano, Petrogas, MRS, Mercuria, Vitol, Oceanbed Trading Limited, Levene Energy, and Bono Energy.
Others are Mocoh Energy, BP Oil, West Africa Gas Limited, Litasco SA, Emadeb, Hyde, Matrix and Brittania-U, Masters, AMG, Casiva, Barbedos, Trafigura, Hindustan and Patermina.
Similarly, the qualified countries comprise China, Niger, Cote D’voire, Ghana, India, Togo, South Africa came tops, while Sierra Leone, Liberia, Turkey, Senegal, and Fujaira also made the cut.
According to the bid requirements, companies qualified to take part in the contract bid are divided into four categories. The first category is a bonafide end user, who owns a refinery and or retail outlets that can process Nigerian crude oil grades
Secondly, for the government to government contracts, or what is termed “bilateral relationships”, with what the corporation terms “high energy consuming nations”, bidding nations must provide proof that the entity is wholly owned by the relevant country or provide evidence of a bilateral agreement with the designated nation.
The third category is the internationally established and globally recognised large volume crude oil traders, while the fourth classification are indigenous companies engaged in Nigeria oil and gas downstream business activities.
In addition, qualifying foreign companies must demonstrate a minimum annual turnover of $500 million or the naira equivalent and a net worth of not less than $250 million or the naira equivalent for the previous financial year.
The qualified companies and countries nominate ships that transport the crude which is sold in the international market. However, in some instances, the corporation also awards contracts to governments to carry out the business.
A further analysis of the pre-qualification requirements indicate the indigenous companies are required to have a minimum turnover of $200 million or the Naira equivalent and a net worth of $100 million for the preceding financial year ending.
Also, bidders are to demonstrate capacity to handle supplies of crude oil and must list facilities and products processed or sold over the last three years and disclose links to NNPC or the Bureau of Public Procurement (BPE) and confirming that their directors have not been found guilty or convicted by a court of competent jurisdiction of fraud or financial impropriety.
The corporation also requires that the local content law must be strictly complied with by a bidding entity in terms of its provisions as they relate to the use of Nigerian shipping companies, insurance and banks where possible.
The latest crude oil lifting approval is coming barely a week after the corporation selected 16 oil and gas consortia for its new crude-for-fuel swap contracts for one year starting in August.
Known as Direct Sale, Direct Purchase (DSDP), the contracts are high-stakes agreements usually signed with qualified companies for the supply of Nigeria’s petrol needs and also cover some diesel and jet fuel (Jet A1) supplies.
Some of the selected entities for the DSDP deal are Trafigura, Vitol and Mercuria, Total as well as Sahara Energy , Oando (OANDO.LG) and MRS Oil.
