NNPC releases guidelines for 2019 crude oil swap contract

The Nigerian National Petroleum Corporation (NNPC) Wednesday unveiled the guidelines for its crude oil-for-product swap programme, known as the Direct Sale and Direct Purchase (DSDP) scheme.
The corporation in a tweet message on its official twitter handle @NNPCgroup, disclosed that it will engage qualified refineries, oil traders, as well as local downstream operators in the 2019 DSDP programme.
NNPC did not state the volume of crude oil it would put into the DSDP programme but usually allocates 445,000 barrels of oil a day from Nigeria’s daily production figures to take care of the country’s daily products consumption. This volume is also often used by it in its crude oil for product swap programmes, including the DSDP.
According to the corporation, the invitation of participants in the swap contract was in line with Nigeria’s public contract and procurement law – the Public Procurement Act 2007, as well as its policy and procedures on same.
It said the decision to engage qualified and credible companies in the DSDP programme was to ensure sustained product supply in the country.
The corporation added that the programme would deliver monthly crude oil lifting on Free on Board (FOB) basis to suppliers who shall in return deliver petroleum products of Nigerian standard specification to it on Delivered at Place (DAP) basis, at designated safe ports in Nigeria.
NNPC equally stated that the petroleum products to be delivered shall be equivalent in value to the crude oil received from it by the suppliers.
NNPC described the company that will be eligible to participate in the swap scheme, as: “An established international end user who owns a refinery with the capacity to process Nigerian crude oil grades and has a Nigerian affiliate or subsidiary experienced in downstream oil and gas business or in partnership with an experienced Nigerian company engaged in downstream oil and gas business particularly petroleum products trading.
It also added that: “An Indigenous company engaged in Nigerian oil and gas downstream activities with trading of petroleum product expertise,” would be allowed to participate.
The duration of the swap contract, it said, would be for a 12 calendar month, that is, between 2019 and 2020.
It said participating companies must provide legal evidence of their existence; tax clearance; compliance with Nigeria’s pension law; the country’s social insurance law; as well as registration on the Bureau of Public Procurement (BPP’s) National Data Base of Federal Contractors, Consultants and Service Providers (NDCCSPs).
With regards to financial requirements, it said: “Minimum turnover of $500 million (or the naira equivalent) and net worth of $250 million (or the naira equivalent) for the year 2017 or 2018 whichever is the current financial year.”
It added that foreign companies applying shall be required to demonstrate evidence of partnership with experienced Nigerian downstream company that meets a minimum turnover of $65 million and net worth of $32.5 million, while indigenous companies shall meet the minimum turnover of $400 million and net worth of $200 million.
NNPC Records 34 Per cent Increase in Pipeline Breaches Nationwide

      Enjoys ₦12.13billion Trading Surplus in DecemberThere appears to be no let-up in the activities of vandals who in December last year pushed pipeline breaches across the Country by a whopping 34 percentage point, NNPC Group General Manager, Group Public Affairs Division, Mr. Ndu Ughamadu, stated this in a release Sunday in Abuja.

Ughamadu said the upward swing in the breaches was captured in the corporation’s Monthly Financial and Operations Report for December, 2018, explaining that within the period, 257 pipeline points were vandalized, out of which one pipeline point failed to be welded and six pipeline points were ruptured.

NNPC recorded 197 breaches on it pipelines in November last year.

Ibadan-Ilorin, Mosimi-Ibadan, and Atlas Cove-Mosimi network accounted for 90, 69 and 57 compromised points respectively or approximately 34 per cent, 26 per cent and 22 per cent of the vandalized points respectively.

Aba-Enugu pipeline link accounted for seven per cent, with other locations accounting for the remaining 11 per cent of the pipeline breaks.

Despite, the activities of the pipeline marauders, the NNPC report said the corporation continued to diligently monitor the daily stock of Premium Motor Spirit (PMS), otherwise called petrol, to achieve smooth distribution of petroleum products and zero fuel queue across the Nation.

The release disclosed that 1.80billion litres of PMS, translating to 58.17m liters/day were supplied for the month.

Overall, during the month under review, 1.96billion litres of white products were distributed and sold by NNPC Downstream subsidiary, Petroleum Products Marketing Company (PPMC), compared with 1.09billion litres in the market in the November 2018.

This comprised 1.94billion litres of PMS, 0.0070billion litres of kerosene and 0.014billion litres of diesel. Total sale of white products for the period, December 2017 to December 2018, stood at 21.84billion litres and PMS accounted for 20.17billion litres or 92.36 per cent.

In terms of value, ₦241.46billion was made on the sale of white products by PPMC in December 2018, compared to ₦146.56billion sales in the November 2018.

Total revenues generated from the sales of white products for the period December 2017 to December 2018 stood at ₦2,778.32billion, with PMS contributing about 89.63 per cent of the total sales with a value of ₦2,490billion.

The NNPC said that despite the disturbing reports of breaches on its assets, the corporation on the whole posted a positive outlook in December, 2019.

The Monthly Financial and Operations Report said NNPC posted trading surplus of ₦12.13billion in December last year, a leap from recent past performances.

The report attributed the positive swing to higher revenue numbers posted by the corporation’s Upstream subsidiary, the Nigerian Petroleum Development Company (NPDC).

The 41st edition of the NNPC monthly report cited NPDC’s continuous revenue drive arising from recent average weekly production of 332,000bpd as the main driver of the positive outlook.

The NPDC targets 500,000bpd production in 2020.

In the gas sector, natural Gas production increased by 12.22 per cent at 240.64 billion cubic feet  compared to output in November 2018; translating to an average daily production of 8,021.21mmscfd. The daily average natural gas supply to gas power plants hiked by 5.36 per cent to 774mmscfd, equivalent to power generation of 3,131MW.

Out of the 240.59bcf of gas supplied in December 2018, a total of 151.13bcf of gas was commercialized, consisting of 38.61bcf and 112.52bcf for the domestic and export market respectively.

This translates to a total supply of 1,245.48 mmscfd of gas to the domestic market and 3,748.47 mmscfd of gas supplied to the export market for the month, implying that 62.61 per cent of the average daily gas produced was commercialized while the balance of 37.39 per cent was re-injected, used as upstream fuel gas or flared.

Gas flare rate was 9.15 per cent for the month under review i.e. 729.55mmscfd compared with average Gas flare rate of 9.92 per cent i.e. 777.37mmscfd for the period December 2017 to December 2018.

t Houston, Baru Says 41Billion Barrels of Crude Oil Remain Untapped

The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr. Maikanti Baru, has stated that more than 41billion barrels of crude oil and 319trillion cubic feet of gas are yet to be discovered in Sub-Saharan Africa.NNPC Group Managing Director, Dr. MaikantiBaru, amidst other discussants at a session of CERAWeek Conference in Houston, Texas

The NNPC GMD stated that from available information, the African global crude oil and gas outlook remained positive and on the upward trajectory, saying the West Africa as the Sub-Region held the ace in terms of offshore Deep Water exploration hotspots.

Dr. Baru made this disclosure during a special session on Africa, entitled: “Foundations for New Investment”, at the ongoing 19th CERAWeek Conference taking place in Houston, United States Wednesday.

He stated that a prolific 1.0Billion barrels of crude oil find was recently made at the Owowo field, offshore Nigeria.

He called on foreign investors to explore the Nigerian Ultra-Deep terrain which he described as largely untested.

Dr. Baru told his audience that in Nigeria NNPC was currently drilling Kolmani River-II Well in the Benue Trough – one of Nigeria’s several frontier inland Basins with about 400 Bcf of gas expected to be encountered.

The occasion also provided an opportunity for the NNPC GMD to make a case for the domestication of oil and gas technologies within the African continent.

He said: “It is my belief that domesticating these cutting-edge technologies will develop the capacity of our people, improve our economies and emplace our national oil and gas companies on the path of sustainable growth and development.”

According to the GMD, African countries must react positively to the new reality by deploying new policies and stabilize their business environment to attract meaningful investments.

He said critical to achieving that for Nigeria was the passage of the four components of the Petroleum Industry Governance Bill (PIGB) which is expected to usher in a new legislation that will not only enhance the investment climate in the country, but also change the fortunes of the nation’s oil and gas business for the better.

Baru informed delegates at the conference that the NNPC was opening up its business environment to ensure transparency and accountability in its dealing with all stakeholders.

He also lauded the Federal Government for its peace initiatives in the Niger Delta communities which he said had seen the country hitting very high oil and gas production figures in recent years.

Ministers and high level energy executives from Mali, Somalia, Namibia and Uganda were among panelists at the Special Session.

Organised by IHS Markit, CERAWeek is a global platform on energy trends and public policy where over 4,000 oil and gas experts convene annually to debate the future of oil, natural gas, renewable energy, power and new technologies.


Baru Calls for Energy Integration Across West Africa 

… As US Pledges to Help Africa Become Energy-Independent

The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr. Maikanti Baru, has called for more integration among countries within the West African sub-region towards providing lasting solutions to the region’s numerous energy challenges.

Dr. Baru made the call Wednesday during a meeting with the United States Energy Secretary, Rick Perry and some African petroleum ministers, on the sidelines of the 19th CERAWeek Conference taking place in Houston, United States.

NNPC Group General Manager, Group Public Affairs Division, Mr. Ndu Ughamadu, in a release in Abuja said Dr. Baru disclosed at the meeting that energy integration across the sub-region was necessary as it would drastically reduce unemployment and restiveness as well as improve the economies of the affected countries.

“Nigeria as a regional leader has already encouraged regional integration by first putting up the West African Gas Pipeline (WAGP) to ensure gas is available to West Africa. We are also doing the Trans Sahara Gas Pipeline (TSGP), even as we are intent on extending the WAGP to Morocco,” Baru told the US Energy Secretary at the occasion.

He said the intent was to come up with a West African Power Pool that would put up power plants and other gas-based industries along those areas within the respective countries.

The GMD said Nigeria’s crude oil production had seen tremendous improvement in recent years, due to Federal Government’s laudable efforts in ensuring security in the Niger Delta region.

He said Nigeria and US had been very good partners with about $35bn worth of trade between the two countries.

Earlier in his remarks, the United States Secretary of Energy, Rick Perry, expressed his country’s commitment towards helping Africa achieve energy independence for the benefit of their people.

“For our part we will support progress by engaging economically as well as championing open markets in societies. We endorse the modernization of critical oil and gas infrastructure which leads to better security and diversification of energy supplies and exports,” he noted.

Describing innovation as the surest path to energy security, Perry added that once countries innovate, they are greeted with greater economic growth, opportunities and national security.

“We support efforts to improve the regional interconnectivity. We also see energy access as critical to increasing prosperity and combating the cycle of poverty,” he added.

He said as the number one producer of oil and natural gas in the world, the US was more than well-positioned to not only share its resources, but also its technology and know-how.

He said his country would work towards transforming the Africa’s domestic energy systems so that it would provide power, create jobs, foster development, open up new opportunities and improve almost every facet of human existence on the continent.

“The US is very eager to share its energy resources and expertise with the African continent. As we go forward, we want to be a desired partner in ensuring that the global energy market are supplied with the diversity of energy sources,” he stated.

Other Ministers and high level energy executives from African countries such as Ghana, Mali, South Sudan, Namibia, Kenya, Uganda and Sierra Leone participated in the meeting.

Baru Says Direct Sale Direct Purchase Scheme Partners Should Patronize Corporation’s Shipping Arm

To ensure sustained profitability of the Nigerian National Petroleum Corporation’s (NNPC) shipping Subsidiary: NIDAS, the NNPC Group Managing Director, Dr. Maikanti Baru, has urged partners involved in the Direct Sale Direct Purchase (DSDP) scheme of the corporation should patronize the NNPC shipping subsidiary.

Dr. Baru passed the advice to two of NNPC’s relevant subsidiaries: Crude Oil Marketing Division (COMD) and the NNPC Trading Ltd, during his visit to the NNPC Office in Hammersmith, London, where he met the staff of both the London Office and NIDAS.

DSDP is a scheme by which NNPC sells crude oil directly to off-shore refiners and receive products from same in return.

A release by NNPC Group General Manager, Group Public Affairs Division, Mr. Ndu Ughamadu, Thursday in Abuja, said the corporation’s GMD, Dr. Maikanti Baru, was elated by the giant profitability strides recorded by NNPC/NIDAS no sooner than it launched into international freight business.

“I wish to commend NIDAS for beginning to make money for the NNPC. I am particularly elated with the company’s performance which has seen it doing 15 voyages on clean petroleum products from October 2018, just four months after it resumed international freight business,” Baru told the company’s staff during the visit.

He called on them to redouble their efforts towards sustaining the current tempo which he said, was in line with the profitability drive of the corporation.

NIDAS Ltd Managing Director, Mr. Lawal Sade, who spoke during the visit of the GMD, lauded Dr Baru for his support and efforts in revamping the company which he said, prior to the GMD’s assumption of office, had been moribund.

“Our recent modest successes wouldn’t have been possible without Dr. Baru’s support. We are truly inspired by this visit and we are ever ready to achieve the targets set for us by the NNPC Management,” he added.

Sade further stated that the company would work harder to sustain the tempo by engaging and soliciting the support of sister NNPC’s outfits and international partners towards improving the corporation’s bottom-line.

Sade informed the GMD that NIDAS had already signed Contract of Affreightment (COA) with BP and Socar for their DSDP clean cargoes, while discussions with Vitol, Mercuria and Petrocam are ongoing.

According to the MD, NIDAS has gradually started to find a good footing from the vessel fixing of last month as they were able to fix vessels below its competitors’ rate, which made some companies particularly Oando to come to NIDAS for a spot charter.

He observed that they were in the process of deploying IT facilities and software that will enable them monitor their ships on the high seas.

Established in 2007, NNPC/NIDAS is a fully-owned subsidiary of NNPC charged with the mandate of shipping clean petroleum products into Nigeria and West Africa.

Stiff Penalty Awaits Defaulters of Due Process in Procurement – Baru

…As NNPC Restates Commitment to Transparency 

NNPC Group General Manager, Group Public Affairs, Dr. MaikantiBaru, address top Management of NNPC at the workshop, Wednesday in Abuja.

The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr. Maikanti Baru, has warned management and staff of the corporation against any action that contravenes the provisions of the Public Procurement Act in the award of contracts, saying severe penalties await any defaulter.

The NNPC helmsman gave the warning at a Supply Chain Management workshop for NNPC Procurement Managers which held Wednesday at the NNPC Towers, Abuja.

A release by the corporation’s Group General Manager, Group Public Affairs Division, Mr. Ndu Ughamadu, stated that Dr. Baru cautioned staff against contract splitting and accumulation, which he described as a deliberate act by procurement managers to subvert due process in the procurement process.

He restated the corporation’s commitment to transparency in every aspect of its operations, stressing that all procurements and contract awards in the corporation under his watch so far had been carried out in conformity with the Public Procurement Act.

To further deepen the culture of transparency in the corporation, the GMD directed the Supply Chain Management Division to step up its level of monitoring of the various tender boards within the NNPC for full compliance.

He commended President Muhammadu Buhari for the early approval of the NNPC budget, assuring that as the chief revenue earner for the nation, NNPC was committed to the economic policies of the Federal Government.

“The whole essence of the next level is to ensure that things are done correctly and speedily for the benefit of the people”, Dr. Baru stated.

The workshop was organized to sensitise procurement Managers in the NNPC to the new procurement policies by the Federal Government.