In a move that has sparked industry buzz, the Nigerian National Petroleum Company (NNPC) Ltd has awarded fresh oil swap contracts valued at $755 million in one month despite claiming to end the scheme last June.
The contracts, known as direct sale and direct purchase (DSDP) are coveted since they are used to supply nearly all of Nigeria’s gasoline needs as well as cover some of its diesel and jet fuel consumption.
Data sourced from NNPC’s financial records showed as of last November, NNPC awarded oil swap deals to Gulf Transport and Trading, AA Rano Nigeria, PV Oil Singapore PTE Limited, Oando Plc, Sahara Energy Resources, Mercuria, Mocoh SA, and Oando DMCC.
Further breakdown showed “DSDP project yield crude oil liftings” gulped a total of 1.85 million barrels, valued at $159.24 million in November last year.
NNPC’s document also revealed that NNPC used 6.66 million barrels (valued at $550.13 million) for its “DSDP PPSA crude oil liftings” deal in the same month.
It also said a total of 516,235 barrels was used for the “Federal Inland Revenue Service (FIRS) DSDP crude oil liftings”. The deal was worth $46.35 million.
The total value of the three transactions is $755.74 million.
NNPC has been importing gasoline from consortiums of foreign and local trading firms and repaying them with crude oil via what are known as DSDP contracts since 2016 because it does not have enough cash to pay for the purchases, data and trading sources said.
“In the last four months, we practically terminated all DSDP contracts. And we now have an arm’s-length process where we can pay cash for the imports,” Mele Kyari, group CEO of NNPC Ltd told Reuters last June.