10 January 2018, Sweetcrude, Abuja — The Nigerian National Petroleum Corporation (NNPC), Tuesday, began the selection of off-takers for Nigeria’s crude oil grade with 254 companies indicating interest in lifting the commodity.
Speaking at the 2018/2019 crude oil term contract bid opening ceremony in Abuja, Group Managing Director of the NNPC, Mr. Maikanti Baru, said the successful companies would be selected based geographical spread and financial capability, adding that the companies would be lifting about 14 cargoes of Nigeria’s crude oil every month.
Baru said the term contract is part of its focus on enhancing its productions volumes while ensuring that the best value is realized through competitive marketing of its various crude oil grades to international refineries and traders.
He also noted that the NNPC is collaborating with key stakeholders to improve the overall security of its production sites, crude oil export lines and other critical oil and gas infrastructure.
Baru, however, stated that the crude oil term contract is not a procurement contract, but a process of selecting partners for the sales and procurement of NNPC equity crude oil volumes.
He said, “The opening of the bids before the entire world is indicative of NNPC’s commitment to President Muhammadu Buhari’s drive for transparency and accountability in the conduct of government business. This is the third bid process the coming of this administration.
“Over the years, we have established processes that have enabled the engagement of the best partners and guaranteed full automation and recovery of the full value of all crude oil lifted. We have also promoted greater participation of Nigerian enterprises while preserving world-class standards.”
Also speaking, Group General Manager, Crude Oil Marketing Division of the NNPC, Mr. Mele Kyari, stated that to qualify for the allocation, which would be done once every month to the successful companies in the 12-month period, the companies must present their 2015, 2016 and 2017 audited accounts and as well provide evidence of their tax clearance certificate.
He said the companies must have a minimum annual turnover of $500 million and a net worth of $250 million for 2016, as well as show ability to establish an Irrevocable Letter of Credit (LC) subject to contract terms, especially as the crude oil would be offered to the companies on credit basis and the NNPC wants evidence that it would get paid for the commodity.