The Nigerian National Petroleum Corporation (NNPC) has selected a consortium made up of 16 firms for its new crude-for-fuel swap contracts.
The execution of the contracts also known as Direct Sale Direct Purchase (DSDP) would commence in August and they are used to supply nearly all of Nigeria’s petrol needs as well as cover some of its diesel and jet fuel consumption.
A report by Reuters identified firms in the consortia as major Swiss trading firms, Trafigura, Vitol and Mercuria, oil major Total and large Nigerian traders, Sahara Energy, Oando and MRS Oil.
Other companies which qualified for the contracts include: AY Mai Kifi, based in Kano; Litasco, a South African firm; Bono Energy, Lagos; Duke Oil, an NNPC subsidiary; Eyrie Energy, based in Abuja; Asian Energy Services; Prudent; BP and Mocoh.
NNPC uses a DSDP system to secure Nigeria’s fuel requirements in exchange for crude, a practice that started many ago because all the country’s refineries have remained non-functional.
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The companies were invited on Friday to submit commercial bids, which were due on Tuesday, according to the report.
Those involved in the process said the list of winners was unlikely to change substantially, with the new DSDPs expected to replace those from 2019, which were extended until mid-2021.
Local content law stipulates that if a foreign oil company wins the contract, it will be paired with at least one local firm.
The NNPC Group Managing Director, Mallam Mele Kyari, had last year said the DSDP had resulted in savings of more than $1 billion a year since its introduction.
Nigeria relies almost entirely on imports to meet oil product demand because of significant and prolonged operational problems at its 445,000 bpd of refining capacity.
The country consumes over 350,000 bpd of petrol with the majority sourced from Europe.
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