25 February 2014, Sweetcrude, Abuja – The Nigerian National Petroleum Corporation (NNPC) has dismissed the Berne Declaration which linked it to several crude oil infractions describing the report as baseless and faulty.
Making a presentation before the House of Representatives Joint Committee on Petroleum Upstream, Downstream and Justice on the investigative hearing of alleged connivance of NNPC with Swiss oil dealers to rob Nigeria of billions of dollars, the Group Managing Director of the NNPC, Andrew Yakubu, said the pricing strategy of crude sales by the NNPC is aligned to international best practices.
He argued that the NNPC prices are indexed to international North Sea grade dated Brent, which prices are published industry magazines, Price Reports, Platts, Petroleum Argus and London Oil Reports, LOR, which can be subscribed to by any interested persons or groups.
On the Berne Declaration Report’s allegation of sale of 36% of total federation crude oil to Vitol and Trafigura, Engr. Yakubu said the NNPC records show that Vitol and Trafigura account for 30.7 million barrels out of the total 341.07 million barrels disposed by the Corporation in 2013 lifting.
“The lifting of Trafigura and Vitol in 2013 represents 9% of the total lifting as against 36% reported by the Berne Declaration. Additionally, Nigerian traders collectively account for 98.2 million barrels or about 29% during the same period,” the NNPC GMD averred.
He opined that contrary to the report, selection of buyers of Nigerian crude are done on a transparent and competitive basis that seeks to establish financial and technical capabilities, promotion of Nigerian Content and general quality and safety assurance.
According to him, the selection of traders has standard criteria which evaluate buyers’ facilities, volume of transactions, turn over and financial health of the companies which is applicable to all, including Vitol and Trafigura.
He explained that the 2012/2013 Term Contracts have a preponderance of Nigerian trading companies with 23 out of the 40 regular buyers.
On the allegation of sale of un-utilised crude oil at knock down prices to Swiss companies through the crude oil product exchange, Yakubu stated that the NNPC Act mandates the Corporation to supply petroleum products to the federation as supplier of last resort, stressing that to meet this obligation, 445,000 barrels of crude oil is assigned to the Corporation at international price for domestic refining.
“The ‘Swap Arrangement’ referred to by the Bernes Declaration is a known practice in the industry where equivalent value of product is exchanged for crude oil offtake. This is a typical procurement strategy for supply constraint but resource dependent nations to hedge for supply security challenges. There is no value loss to the federation,” Yakubu submitted.
The NNPC helmsman observed that contrary to the claim by the report that NNPC does not sell directly to the International market, Duke Oil and other NNPC affiliated trading companies participate in the disposal of Nigerian crude oil and account for 24% of the total disposals.
In his opening remarks, the Joint Committee Chairman and Chairman of House of Representatives Petroleum Committee Upstream, Hon. Muraina Ajibola, said the Committee would undertake the investigative hearing assignment with every sense of responsibility.
The Crude Oil Marketing Division of NNPC and Duke Oil, an affiliate company of NNPC also made presentations to the Committee.
It would be recalled that the Berne Declaration, a Swiss non-governmental organization in its 2013 report alleged that NNPC was conniving with Swiss Companies to short-change Nigeria of several billions of dollars.
In a related development, the NNPC has reassured Nigerians of ample fuel supply dismissing rumours of possible increase of pump price of premium motor spirit otherwise called petrol by the Federal Government.
The NNPC said to the best of its knowledge there were no plans by the Federal Government to hike price of fuel urging motorists not to indulge in panic buying as there was enough product to last the country for several weeks.
The Corporation observed that the re-emergence of long queues were as result of hoarding by filling station owners in vain anticipation of fuel price hike. The NNPC Spokesman, Dr. Omar Farouk Ibrahim implored filling station owners to refrain from hoarding in order to help lessen long queues.
The NNPC cautioned marketers who have being loading petrol from their various depots not to hoard the product as erring marketers will be sanctioned for such sharp practices.