A subsidiary of Nigerian National Petroleum Corporation (NNPC), Duke Oil, has signed a Memorandum of Understanding with Indonesia’s state oil corp, Pertamina, and Indian Oil Corporation, to supply 30,000 barrels of crude oil per day.
It is expected that the deal will shore up revenue for Nigeria in the midst of volatility and uncertainty in the oil industry.
It was gathered that the partnership might drive the profit of the NNPC to about $70 million in the 2021 trading year.
The Managing Director of NNPC Trading Company Limited, Lawal Sade, who disclosed this in the latest edition of NNPC Quarterly Magazine, said that its oil trading entity, Duke Oil, has diversified its trading portfolio and adopted alternative trading strategies to increase its volumes and profitability.
Sade explained that the subsidiary has concluded plans to take part in upstream third-party financing for direct access to Nigeria’s equity crude oil and secure 120,000MT of storage and blending facilities offshore.
The subsidiary is also expected to expand into into bitumen and base oil importation in the 2021 trading year.
“Further from the impacts of COVID-19 and the thinking-out-of-the-box his management adopted, the company made remarkable inroads into the Asian market as a secured off-taker of Nigeria’s crude. From this, supply deals were hammered out with refiners in India amongst others.
“Based on this performance, Duke Oil has set its eyes on leveraging the inroads made in the Asian and Middle East market for sale of Nigeria’s crude oil grades.
“It is thus poised to secure term contracts for the supply of 30,000bpd of oil to Indonesia’s Pertamina, partake in Indian state-owned refineries crude oil purchase tender and develop counterparty business relationship with other Middle Eastern state-owned oil enterprises,” Sade disclosed.
He disclosed in the report that Duke Oil would focus on growing crude oil and petroleum products trading activities by expanding its importation and sale of crude oil and petroleum products offshore and developing a trading hub offshore Lagos amongst others.
“The company also hope to undertake active participation in derivative markets, by registration and engagement with major trading houses while commencing derivatives trading to manage price risks.
“Ultimately, in 2021, NNPC Trading Management is geared towards activation of a robust business plan & automation and organizational structure to support the business expansion activities through,” the publication stated.
On the cost containment plan, it added that Duke Oil intends to cut demurrage cost by 25 per cent through proper planning and scheduling of shipments with optimal operational efficiencies in alignment with relevant stakeholders.’
The publication disclosed that the subsidiary intends to cut administrative expenses by 15 per cent through contract renegotiation strategy and online meetings.