A Review of the Nigerian Energy Industry

Nigeria loses $8bn through crude oil swaps – NEITI

Crude oil28 February 2014, Abuja – Nigeria may be losing an estimated $8 billion annually through the crude oil-for-refined products exchange arrangement, better known as crude oil swaps, which the Nigerian National Petroleum Corporation (NNPC) has with oil traders such as Trafigura, Vitol, Aiteo Energy Resources, Mercuria, Glencore, Taleveras Group Nigeria Limited, Sahara Energy Limited, Etena Oil and Gas Limited, Ontario Oil and Gas and Rahmaniya Oil and Gas.

Of the 445,000 barrels of crude oil per day brought by NNPC to meet its domestic crude refining capacity, slightly under 50 per cent is swapped with commodity traders in exchange for petroleum products which are imported into the country. The other 50 per cent is supposedly refined by NNPC’s refineries.

However, the state-run oil company has said contrary to claims by a Swiss-based non-governmental organisation (NGO), Berne Declaration, that 36 per cent of its crude oil is lifted by Vitol and Trafigura, both Swiss traders, account for 9 per cent of lift contracts.

The corporation also denied that the federal government lost $6.8 billion in oil revenue as a result of the oil swaps it has with Swiss-based companies listed in the NGO’s report, which prompted the probe instituted by the House of Representatives.

Speaking yesterday before an ad hoc committee set up by the House to investigate the allegations made by the Swiss NGO, the Group Managing Director of NNPC, Andrew Yakubu, said the oil corporation never sold crude oil to the firms at below market price as claimed by Berne Declaration in its report.

“By our records, Vitol and Trafigura account for 30.7 million barrels out of the total of 341.07 million barrels sold by the corporation in 2013 lifting. The lifting of Trafigura and Vitol in 2013 therefore represents 9 per cent of the total lifting as against 36 per cent reported by the Berne Declaration,” Yakubu explained to the committee chaired by Hon. Muraino Ajibola.

Instead of foreigners dominating the oil deals, the NNPC boss said more chances were given to Nigerian traders, who “collectively accounted for 98.2 million barrels during the same period, other international traders including the Swiss trading companies accounted for 61.2 million barrels, while offshore and the Nigerian refineries took 36.2 and 38.3 million barrels respectively.”

According to him, the selection of traders has standardised criteria, which evaluate buyers’ facilities, volume of transactions, turnover and financial health of the companies that is applicable to all, including Vitol and Trafigura.


– This Day

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