It is cheery, yet, crunch time for the proprietors of Heyden Oil, MRS and some other indigenous oil and gas companies who recently won the much-talked about Nigerian National Petroleum Corporation, NNPC, oil-for-product swaps.
The NNPC recently signed the $6 billion worth of deals to exchange more than 300,000 barrels per day (bpd) of crude oil for imported gasoline and diesel.
According to reports, for this year, the contract is given to an international oil trader/refiner, who then partners an indigenous oil marketing company. And there were three more oil consortiums than last year, reflecting Nigeria’s increased reliance on the NNPC for fuel imports.
The lucky companies are Trafigura, which is partnering A.A. Rano; Petrocam, partnering Ranoil and Falcon; Mocoh, partnering Heyden; Cepsa, partnering Oando; Sahara, partnering Societe Ivorienne de Raffinage, SIR; and Mercuria, partnering Matrix and Rahamaniya. Others are Socar, Litasco and Vitol, whose indigenous partners are Hyde, MRS and Varo respectively.
The oil-for-product swap is being done to sustain the supply of petroleum products across the country while entrenching transparency in the crude oil-for-product transactions thereby saving the country $1 billion.
The contracts were initially to begin in April but were delayed for the NNPC to have more time to negotiate their terms and the products specifications. Under the agreements, Nigeria will purchase only low-sulphur fuels.
Though, on paper, Nigeria has the capacity to process 445,000 barrels of crude per day, most of the fuel needs of Nigerians are imported. This is due to the fact that the nation’s four refineries are functioning at low-capacity. In the past quarter, the country refined about 111,000 barrels per day thus 25% of its capacity.
Interestingly, It is often said that to succeed in the oil sector, you must have the heart of Hercules, the fearlessness of Achilles, the grace of Terpsichore, the memory of Macaulay, and the hide of a rhinoceros. Prince Dapo Abiodun, MFR, the ebullient Managing Director of Heyden Group, conveniently exudes all of that, thus his ascension to the top of the oil industry’s greasy pole.
