All offshore
crude oil processing agreements and crude oil swap deals for refined petroleum
products between the Nigerian National Petroleum Corporation, NNPC, and oil
traders around the world have been cancelled by the Federal Government.
Presidential
spokesperson, Femi Adesina, told Reuters news agency on Tuesday that President
Muhammadu Buhari has given approval for the immediate cancellation of the
agreements.
The Ahmed
Joda-led Presidential Transition Committee had recommended to the Buhari
administration to carry out a comprehensive audit of all Offshore Processing
Agreements, OPAs, and Crude Oil Swap deals entered by the NNPC.
The committee had
said the audit would help government identify and claim any reimbursements for
excess crude oil lifted under the controversial OPA and Swap arrangements to
establish the quantity of products delivered based on a fair and transparent
audit process.
Apparently,
acting on the committee’s recommendations, the Group Managing Director of the
NNPC, Ibe Kachikwu, recently hinted that all Production Sharing Contracts,
PSCs; Joint Venture Contract Agreements, JVCAs, and all other contracts between
the NNPC and its various partners would be reviewed to reflect current day
realities in the global oil and gas industry.
“Mr. President
has approved the cancellation of the oil swap contracts. Mr. President has
publicly expressed his displeasure over this oil swap deal,” Mr. Adesina said
in response to enquiries by Reuters.
The deals,
initiated by the Goodluck Jonathan administration, were designed to supply
petroleum products for crude oil refining to cushion the negative impact of
continued reliance on imports domestic consumption.
NNPC
spokesperson, Ohi Alegbe, did not answer or return calls by PREMIUM TIMES
seeking to confirm the cancellation.
However, a source
close to the NNPC, who pleaded anonymity as he was not authorised to speak on
the issue, said the cancellation affected contracts for more than half of the
445,000 barrels per day of crude normally allocated for domestic refining
usually used under the products swaps deals.
Although the
source said government was not completely jettisoning the crude swap
arrangements, he however explained that the main objective was to enable
government review and re-evaluate the contracts in a way that would help
restructure the terms to be more favourable to Nigerians.
Crude oil swap
for refined petroleum products took a controversial connotation after concerned
Nigerians like the former Governor of the Central Bank of Nigeria, Lamido
Sanusi, and some regulatory agencies, majorly the Nigeria Extractive Industries
Transparency Initiative (NEITI) criticised the deals as lacking transparency
and accountability.
