Nigeria’s December crude loading emerge, swap deal extended

As crude buyers wait for December export programmes to unfold, offers for Nigerian cargoes edged higher, although traders said the recent burst of buying activity appeared to have fizzled out almost immediately.

After a burst of activity, driven in part by Indian demand, spot trade has cooled off somewhat, sources said. The December programme is due to emerge later this week but almost 20 cargoes of November-loading Nigerian crude was still available for sale.

The Nigerian National Petroleum Corporation (NNPC) is yet to issue its monthly official selling prices. However, snippets of Nigerian December crude loading programmes reveal the Qua Iboe stream will load eight cargoes of 950,000 barrels each, equal to 245,000 barrels per day in December, down from November’s 253,000 bpd rate. Glencore has offered an early-November loading cargo of Qua Iboe at a premium of around $1.70 a barrel to dated Brent, above recent indications of closer to $1.60-1.65 while ENI was said to be offering Bonga at similar levels.

Meanwhile the NNPC said it has extended its crude-for-product swap contracts, the country’s main avenue to meet the bulk of its fuel needs, until June 2019. Nigeria’s premium motor spirit (PMS) consumption is roughly 40 million litres per day. Its 445,000 barrels per day refining capacity have been underperforming for years, making Africa’s biggest oil producer almost wholly dependent on imports to meet its domestic petroleum products’ needs.

NNPC’s swap contracts currently account for about 70 percent of the country’s imports while 30 percent is done through the spot market, one of the sources added.

The swap contracts, known as Direct Sale Direct Purchase, came into effect in July last year and were due to end after one year. They were already extended once earlier this year to December.

NNPC paired up foreign trading firms with local partners to do the swaps. The following is a list of the 10 DSDP groupings: Trader/Refinery Local partner(s) Volume (minimum expected) Trafigura AA Rano 33,000 bpd; Petrocam Rainoil/Falcon 33,000 bpd; Crest Mocoh Heyden 33,000 bpd; Cepsa Oando 33,000 bpd; Sahara SIR 33,000 bpd; Mercuria Matrix/Rahmaniya 33,000 bpd; Socar Hyde 33,000 bpd; Litasco MRS 33,000 bpd; Vitol Varo 33,000 bpd; Total Total 33,000 bpd. The total for the 10 groupings is 330,000 bpd.

Also, the state-oil company is separately in advanced discussions with some of the swap contract holders to invest in rehabilitating its refineries. Two consortiums were picked earlier this year but ironing out the financing of the projects has been slow.

FRANK UZUEGBUNAM