The country will save about N41.4bn ($207m) in six months as a result of the recent cancellation of the offshore processing agreements with some international oil companies, the Nigerian National Petroleum Corporation has said.
The NNPC, in its latest monthly financial and operations report for September 2015, stated that the cancellation of the OPAs was one of its key interventions in the month under review.
In the OPA, the NNPC undertakes to allocate a dedicated volume of crude oil for refining at offshore locations in exchange for petroleum products at pre-agreed yield pattern.
Outlining some its key interventions as of September, the corporation said, “The OPA contracts (were) cancelled; $207m savings to be realised in six months. (The) engagement of key security agencies to boost pipeline security (is) ongoing.”
On August 26 this year, the NNPC announced the termination of the OPAs entered into in January with three companies, Duke Oil Company Incorporated, Aiteo Energy Resources Limited and Sahara Energy Resources Limited.
The national oil firm had stated that the agreements were not in the interest of Nigeria and the corporation, a development that led to their cancellation.
“However, after detailed appraisal of the operation and its terms of agreement, the NNPC is convinced that the current OPA is skewed in favour of the companies such that the value of the product delivered is significantly lower than the equivalent crude oil allocated for the programme,” it had stated.
The latest NNPC report further noted that in September, 763.90 million litres of white products (petrol and kerosene) were supplied to the country through the OPA arrangement, compared with a volume of 701.29 million litres achieved in the month of August.
It stated that kerosene receipt in September was 196.3 million litres compared with zero litres imported a month earlier.
To ensure that Nigeria gets the best companies in the OPA arrangement, on October 15, a total of 101 international and local oil companies competed for the award of OPAs from the NNPC.
International oil trading companies like Glencore, Vitol S.A, BP Oil International and Total Oil Trading S.A joined 97 other companies in bidding for the OPAs.
Out of the 445,000 barrels per day of crude required for refining, the successful companies in the process are expected to lift about 210,000 barrels within a 12-month period, starting from January 2016.