The Nigerian National Petroleum Corporation (NNPC) has said it’s new contract for sale and purchase of Nigerian crude oil grades is designed to ultimately put an end to the fake supply glut or oversupply which prevails under the current arrangement.
This according to the Corporation will help stabilize prices and optimise value of Nigerian crude grades at the international market, adding that the contract will be limited to government’s entitlements which is in the region of 950,000 barrels per day (bpd).
The General Manager Crude Marketing Department of the NNPC, Melee Kyari, while speaking yesterday during the bid opening in Abuja, said :What we have done is to change some of these terms so that at the end of the day we will have a more robust and internationally accepted framework.”
To this end, he explained that under the new contract, the NNPC will only be working with credible companies even as he said, the number of companies would be cut down from the present 43 to about 16 for effective management out of the 278 tenders received.
“We are going to cut down the number of buyers substantially and we will probably be dealing with about a third of that number so that at the end of the day, every customer will have the opportunity of planning his lifting programme, lock down their deals and be sure that they will get volumes. The fewer people we deal with, the better for all of us.”
“That means that we come down from 43 to something smaller. We are thinking in the region of one third of that number, probably 15 or 16 and that will be an optimum number,” he said.
While assuring on transparency in the process, he stressed that selection is going to be based on people who are able to take Nigeria’s crude to the market, adding “no other considerations will come into play.
“We have clear objectives and that is to make sure that our crude oil ends with the ultimate end user. What that does is that it balances our pricing and we don’t have these shocks that we are having and Nigeria does not become a major contributor to the instability in the crude oil market which is happening today,” he stated.
Kyari pointed out that the absence of credible buyers in the past had resulted in situations where “individuals pick cargoes not knowing what to do with them and at the end of the month it becomes an overhang and we have fake supply glut or oversupply that doesn’t exist but which the market reacts to and we have lower values.
“Our first reaction is to make sure that we optimise the value of our crude and for you to do that, you must get credible and reliable customers, which means, to have buyers who take off from them and they need to be guaranteed that every month they will have supplies; some level of stability that will enable them plan,” he said.
He added that the NNPC will further need as a market strategy, to sell to people in groups because the market has categories of buyers which includes refiners, trading and production companies.
Source : Leadership