NNPCL To Trade N2.6tn Crude For Refined Products

FG Owes NNPC ₦2.8trn Used For Petrol Subsidy

The most recent statistics from the Nigeria Extractive Industries Transparency Initiative (NEITI) revealed that the Nigerian National Petroleum Company Limited (NNPCL) swapped crude oil worth N2.6 trillion for refined petroleum products in 2021.

An examination of crude oil production numbers gathered from the recently released NEITI 2021 Oil and Gas Report revealed that the national oil firm did not transfer any crude oil to Nigeria’s refineries during the time under consideration.

NEITI, on the other hand, noted that NNPCL’s failure to send oil to local refineries might be attributable to the fact that the facilities were not functioning at the time.

Nigeria’s refineries at Port Harcourt, Kaduna, and Warri have been idle for years, while rehabilitation is under underway. The NEITI report stated that the oil firm exchanged Nigeria’s crude oil for refined products under its Direct Sale Direct Purchase programme, adding that crude oil sales receipt during the review period was N2.23tn.

Under the DSDP scheme, initiated in 2016, selected overseas refiners, trading companies and indigenous companies are allocated crude supplies in exchange for the delivery of an equal value of petrol and other refined products to the NNPCL.

Commenting on this in its latest report, NEITI said, “NNPC allocated a total of 98.92 million barrels of crude oil valued at $7.11bn (N2.73tn) for the local market in 2021. However, no crude was delivered to any of the local refineries in 2021.

“Instead, NNPC used 95.25 per cent of this crude for crude exchange for products at the international market under the DSDP arrangement, while 4.75 per cent was sold at the international market.

“This may be due to the fact that none of the refineries were operational in 2021. The sum of N2.23tn ($5.85bn) was the actual domestic crude sales receipts in 2021, out of which the sum of N1.64tn ($4.30bn) represents 2021 sales receipts, while the sum of N588.68bn ($1.55bn) relates to settlement of prior year receivables.”

The report also showed that the NNPCL lifted and exported a total of 24.84 million barrels of crude oil valued at $1.70bn on behalf of the Federation in 2021.

It said the sum of $1.58bn was traced to the respective bank accounts as the actual sales receipt in 2021, of which the sum of $1.55bn represents 2021 sales receipts, while the sum of $24.32m relates to settlement of prior year receivables.

This, they said, would reduce the pressure on the naira, stop the DSDP arrangement and ensure sustainable supply of refined petroleum products in-country.

“We are going to continue advocating the revamp of our refineries. If our refineries are functioning, the crash of the naira against the dollar would reduce, because the demand pressure for dollars by marketers will drop,” the National Public Relations Officer, Independent Petroleum Marketers Association of Nigeria, Chief Chinedu Ukadike, stated.

He added, “Similarly, we will not need this DSDP thing, because we will be refining our products here in Nigeria, not exchanging our crude with anybody or company overseas.

“So getting our refineries working is key in addressing some of these challenges we face in the downstream oil sector, particularly with respect to the supply of refined petroleum products.”

Ukadike also stated that the emergence of functional modular refineries was long overdue. “What is stopping the government from giving modular refineries’ operators the required support so as to reduce our continued dependence on imported petroleum products?

“The emergence of functional modular refineries in their numbers in Nigeria is long overdue. We cannot continue to import products when we can build modular refineries that can help us refine some of our crude oil.

“We know that subsidies also contributed to their inability to come on stream as required. Now that it has been reduced, we expect the government to also give them the required support so that many of them can start development and refine crude in the nearest future,” Ukadike stated.


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