Nigerian state oil firm NNPC has recently said that it will award new crude for oil products swap agreements to leading refiners Total, Varo Energy, Cepsa and ENI.
According to the head of NNPC’s crude marketing unit, Mele Kyari, the deals, which are expected to begin in February, differ from the former “offshore processing” agreements as they are directly with refineries who can use the crude to produce the oil products the country needs.
NNPC’s head of corporate planning, Bello Rabiu, said there was no need to budget money for fuel subsidies in 2016, as the country can reduce the cost of imported fuel below the current retail price.
“In the next 12 months, the price of oil will definitely not be high…securing the pipeline systems, removing the corrupt issues and ensuring that we pay only for what we consume…if we can get all these stages done…that will eliminate any call for subsidy in the next few months,” Rabiu said.
NNPC cancelled the initial bidding process for crude swap agreements in November, deciding to pick 14 refiners that could process the oil themselves in order to eliminate middlemen.
Varo Energy is a joint venture refining company between global oil trader Vitol and private equity firm Carlyle Group. Cepsa, ENI and Total are all integrated oil companies with refineries in Europe.
