NNPC interim crude swap agreement lacks transparency, says ANEEJ

Dr Emmanuel Ibe Kachikwu

Dr Emmanuel Ibe Kachikwu, Minister of State, Petroleum Resources

Dr Emmanuel Ibe Kachikwu, NNPC, GMD
Dr Emmanuel Ibe Kachikwu, NNPC, GMD

The Africa Network for Environment and Economic Justice (ANEEJ), a Non-Governmental Organisation working on Oil and Gas matters has criticized the interim crude swap contract entered into with four companies by the Nigeria National Petroleum Corporation (NNPC) expected to last from October to December 2015, saying the process of engaging the companies falls short of the Provisions of the Nigeria Extractive Industries Transparency Initiative (NEITI) Act 2007.

Reports say two of the agreements are with NNPC Joint-Venture companies — one with Swiss trader Vitol called Calson and the other with commodities trader, Trafigura called Napoil. The other two are with non-incorporated Joint Ventures between oil major BP and Nigermed Limited and NNPC’s trading arm Duke Oil Company with Sahara Group.

“Nigerians suddenly woke up to the news of engagement of the four companies by the NNPC. The process of engaging the four companies was not open and competitive and did not also take into account Civil Society Observation as espoused in NEITI Act and other statutes which wereenacted to mainstream transparency and accountability into Nigeria’s extractive industries.” says Executive Director of ANEEJ, Rev. David Ugolor.

“We are further alarmed that the same Geneva companies Trafigura and Vitol reported in the Bern Declaration Report of 2013 to have outclassed their competitors in opaque partnerships with the NNPC are the same companies that have been contracted by the NNPC for further oil swaps.

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“The Bern Declaration (BD) which was being investigated by the 7th National Assemblyreports of instances which show that sales between the NNPC and the two Swiss partners were carried out at prices lower than the market rates which some persons behind the scene were reaping from. They were carried out in frequent operations that appeared incongruous and shrouded in opacity that involves subsidiaries domiciled in tax heavens.” Ugolor said.

“We observe that the interim crude swap agreement is in sharp contrast with the agenda of President Muhammadu Buhari determination to rid the nation’s Oil and Gas industry and indeed all sectors of corruption responsible for the hemorrhaging of the nation into frightening poverty,” the ANEEJ helmsman said.

The NNPC had stated that only 16 firms would be engaged to serve as off-takers‎ for the 2015/2016 crude oil term contract‎ from the current 43. According to the NNPC, the decision to prune the number of off-takers was borne out of the need to instill transparency and probity in the award of the annual Crude Oil Term Contract, but ANEEJ said it “wants the NNPC to take steps to end oil swaps in the country. Pruning them to 16 is a welcome development, but we want an end to oil swaps in Nigeria because it is the hot bed for oil theft and bleeding of the economy.

“The best measures to optimize the marketing of Nigeria’s crude oil and secure new market potentials is not to embark on oil swap deals but to ensure local refining of the crude and market the refined products both locally and internationally. We are happy that our refineries are working again, but they, including the new licensees need to work optimally to meet both domestic and international market needs,” Ugolor stated.

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