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  • Oil & Gas - News
  • Updated: September 25, 2023

NNPC Traded N2.6 Trillion Crude For Refined Products In 2021, Says NEITI

NNPC Traded N2.6 Trillion Crude For Refined Products In 2021

The Nigerian National Petroleum Company Limited traded crude oil worth N2.6 trillion for refined petroleum products in 2021, according to the most recent data from the Nigeria Extractive Industries Transparency Initiative, an organisation under the federal government.

According to data on crude oil output taken from the NEITI's recently issued 2021 Oil and Gas Report, the national oil firm did not ship any crude oil to Nigeria's refineries throughout the time period under consideration.

However, NEITI noted that the lack of crude delivery by NNPCL to domestic refineries may have been caused by the fact that the facilities weren't in use at the time.

Although restoration work is now being done at the facilities, Nigeria's refineries in Port Harcourt, Kaduna, and Warri have been idle for years.

According to the NEITI study, the oil company used its Direct Sale Direct Purchase programme to exchange crude oil from Nigeria for refined goods. It also revealed that the amount of crude oil sold during the review period was N2.23 trillion.

Selected domestic and international refiners, trading firms, and companies are given access to crude supplies under the DSDP system, which was introduced in 2016. In return, these parties must produce an equivalent amount of petrol and other refined products to the NNPCL.

Commenting on this in its latest report, NEITI said, “NNPC allocated a total of 98.92 million barrels of crude oil valued at $7.11bn (N2.73tn) for the local market in 2021. However, no crude was delivered to any of the local refineries in 2021.

“Instead, NNPC used 95.25 per cent of this crude for crude exchange for products at the international market under the DSDP arrangement, while 4.75 per cent was sold at the international market.

“This may be due to the fact that none of the refineries were operational in 2021. The sum of N2.23tn ($5.85bn) was the actual domestic crude sales receipts in 2021, out of which the sum of N1.64tn ($4.30bn) represents 2021 sales receipts, while the sum of N588.68bn ($1.55bn) relates to settlement of prior year receivables.”

The study also revealed that in 2021, the NNPCL lifted and exported for the Federation a total of 24.84 million barrels of crude oil worth $1.70 billion.

According to the statement, the sum of $1.58 billion was identified as the real sales receipt for 2021, of which $1.55 billion represents 2021 sales receipts and the remaining $24.32 million relates to the settlement of prior year receivables.

Operators in the downstream industry have urged the federal government to step up efforts to convince Nigeria's refineries to process crude oil produced in that nation.

They said that doing so would ease pressure on the naira, end the DSDP agreement, and guarantee a steady supply of refined petroleum products within the nation.

the National Public Relations Officer, Independent Petroleum Marketers Association of Nigeria, Chief Chinedu Ukadike, stated, “We are going to continue advocating the revamp of our refineries. If our refineries are functioning, the crash of the naira against the dollar would reduce, because the demand pressure for dollars by marketers will drop.”

He added, “Similarly, we will not need this DSDP thing, because we will be refining our products here in Nigeria, not exchanging our crude with anybody or company overseas.

“So getting our refineries working is key in addressing some of these challenges we face in the downstream oil sector, particularly with respect to the supply of refined petroleum products.”

Ukadike further noted that effective modular refineries have been long overdue. “What is stopping the government from giving modular refineries’ operators the required support so as to reduce our continued dependence on imported petroleum products?

“The emergence of functional modular refineries in their numbers in Nigeria is long overdue. We cannot continue to import products when we can build modular refineries that can help us refine some of our crude oil.

“We know that subsidies also contributed to their inability to come on stream as required. Now that it has been reduced, we expect the government to also give them the required support so that many of them can start development and refine crude in the nearest future,” Ukadike stated.

Dolapo Kotun, Deputy Chairman of the Oil Refinery Owners Association of Nigeria, told our reporter that modular refineries will remain viable despite the arrival of the Dangote Refinery, which is expected to produce 650,000 barrels of oil daily.

CORAN is a registered Nigerian organisation of modular and conventional refinery firms.

"Modular refineries are very viable and essential in securing Nigeria's energy needs now and in the future," stated Kotun, Executive Director, Operations, Ikwe-Onna Refinery Ltd., and Chairperson, Downstream, Women in Energy, Oil and Gas.

"They are distributed among numerous sites in the Niger Delta region, rather than simply one, as is the case with the Dangote Refinery.

“Hence these modular refineries will be able to immediately provide world-grade quality refined petroleum products to the local markets around their different refinery sites.

“Dangote’s capacity alone cannot meet Nigeria’s present refined products’ needs and we are not even sure when it will start producing even though it was ‘commissioned’.

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