NNPC cancels contracts for crude oil delivery to refineries

• Okays seven firms for fresh bids 

THE Nigerian National Petroleum Corporation (NNPC) has cancelled contracts for supply of oil to refineries among other steps aimed at boosting operational efficiency.

General Manager, Group Public Affairs Division, Ohi Alegbe, in a statement issued in Abuja yesterday said the new measures would strengthen the corporation across its value chain.

He added that the steps were taken after proper evaluation in line with the terms of contract for delivery of crude oil to the nation’s refineries in Warri, Port Harcourt and Kaduna, after which the corporation cancelled the current contract due to exorbitant cost and inappropriate process of engagement.

It noted that, as a stop-gap measure, NIDAS Marine Limited, a subsidiary of the NNPC, has been engaged to provide crude delivery service on negotiated industry standard rate pending the establishment of substantive contract. “We have also commenced a rigorous and transparent process of securing capable and competitive contractors for the delivery of crude oil by marine vessels to Port Harcourt and Warri/Kaduna refineries, pending the restoration of the crude pipeline infrastructure,” the corporation stated.

The NNPC explained that it resorted to the delivery of crude oil to the refineries by marine vessels following incessant attacks on the Bonny-Port Harcourt refinery pipeline and the Escravos crude pipelines by vandals and oil thieves, which resulted in complete unavailability of the pipelines in 2013.

It also announced the termination of the Offshore Processing Agreements (OPA) entered into in January 2015 with three companies, namely- Duke Oil Company Inc., Aiteo Energy Resources Limited and Sahara Energy Resources (Nig) Ltd.

Under the agreement, NNPC allocates a total of 210, 000 barrels of crude oil per day for refining at offshore locations in exchange for petroleum products at pre-agreed yield pattern.

It added: “However, after detailed appraisal of the operation and its terms of agreement, the NNPC is convinced that the current OPA is skewed in favour of the companies such that the value of product delivered is significantly lower than the equivalent crude oil allocated for the programme.”

NNPC also observed that the structure of the agreement does not guarantee unimpeded supply of petroleum products, as delivery terms were not optimal.

To address these lapses, NNPC hinted that it has commenced the process of establishing alternative OPA based on optimum yield pattern with tender processing fees. “After due appraisal of performance trajectory, we have invited Messrs.

Oando, Sahara Energy, Calson, MRS, Duke Oil, BP/Nigermed and Total Trading to bid for the new Offshore Processing Agreement while we have engaged AITEO, Sahara Energy and Duke Oil to exit the current OPA,” it explained.

On the status of the crude for product exchange agreement (SWAP) reportedly entered into by the NNPC and some oil traders, the corporation informed that the last SWAP arrangement lapsed in December 2014 and was never renewed.

The NNPC also informed that it has obtained the permission of President Muhammadu Buhari to kick-start the tendering process for the 2015/2016 Crude Oil Term Contract for the evacuation of Nigeria’s crude oil equity from the various crude and condensate production arrangements.

The Corporation noted that the process, which would commence with the advertisement of the Crude Oil Term contract in both National and International print media for a period of one month, has been carefully structured to weed out ‘briefcase companies’ and rent seekers.