Nigeria to keep oil-for-fuel swap for another 3 years
Nigeria, which previously had a goal of revamping the plants by this year, will persist with an annual swap program until the refineries are fixed by 2023, GMD of NNPC, Mele Kyari, has said.
The latest round of the swap program, known as Direct Sale, Direct Purchase, or DSDP, will run until September 2020 and then be extended.
“The DSDP is a child of necessity and not a permanent arrangement,” Kyari said. “So anytime we are able to meet our domestic petroleum products requirement, of course DSDP goes away.”
Nigeria has been struggling to become self-reliant in products such as PMS and diesel for several years because its own refineries are working at a fraction of their capacity. That puts a strain on foreign currency reserves because, in order to obtain fuels, Nigeria is forced to swap crude that it would otherwise sell for dollars.
The Nigerian National Petroleum Corp. said in August that companies including Vitol SA, Litasco SA and Sahara Energy Ltd. were shortlisted to exchange crude for gasoline. The latest round of the DSDP will start next month.
Four plants run by the state oil company operate far below their combined 445,000 barrel-a-day potential, forcing Nigeria to import more than 90% of its fuel requirements.
NNPC first began the swap contracts more than six years ago as a stopgap to curb gasoline shortages as it tried to revamp the refineries. The measure will now continue until at least 2022-23, Kyari said. For this year’s program, NNPC is looking for 14 billion liters, or 14 cargoes monthly.
Kyari said a new target to revamp the refineries has now been set for 2023, starting with the 210,000 barrel-a-day capacity plant in the southern oil hub of Port Harcourt.
“What we are doing is to see how can we get our refineries back on course and how do we support others to increase local refining capacity,” Kyari said.
“Ultimately, by 2023 we should be a net exporter of petroleum products, assuming we’re able to get Dangote refinery at full capacity and we’re able to fix our refineries.”
Billionaire Aliko Dangote, Africa’s richest man, is building one of the world’s biggest single-train refineries in Nigeria. The 650,000 barrel-a-day facility will be “a game-changer” for Nigeria and the West African fuel market, Kyari said. It is expected to be ready early next decade.
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