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Nigeria Awards $60B Worth of Oil Contracts

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Nigeria Awards $60B Worth of Oil Contracts

LONDON - Nigeria this week finally signed contracts allocating supply of its oil in the coming year in a string of deals worth around $60 billion.

The Nigerian National Petroleum Corp, or NNPC, awarded 50 companies 1.59 million barrels a day of oil for the period from August 2011 to July 2013, a list of term contracts seen by Dow Jones Newswires showed Friday.

Based on the current price of Brent crude, the supply deals are worth $159 million a day, or just under $60 billion a year.

The process of allocating term supply has dragged on for months, creating uncertainty in the market over future supply due to a dispute in Nigeria over the initial terms of application.

Africa's largest oil producer first invited companies to apply for term contracts in late March, but this deadline was extended later after the state-owned oil company was accused of favoring international companies and ignoring the Nigerian Content Act.

The Nigerian Content Act was passed in 2010 in a move to increase Nigerian companies' role in the country's oil industry.

Unlike last year, when big trading companies like Trafigura Group, Vitol Holding B.V. and Glencore International PLC were awarded large volumes of crude, this year their allocation was halved, the list showed. The number of companies to receive term supply rose from 45 in 2011 to 50 in 2012 with a large number of Nigerian companies included in the mix.

However, traders on the West African market said many of the barrels would likely end up with the usual suspects--trading companies or oil majors--despite the large volume of term contracts awarded to new participants. Many of the smaller companies are expected to sell on their allotted volume to the larger players.

"The question is where those barrels will end up...if [the companies] front majors or traders," said one trader with large international oil company in Nigeria.

Asian companies, Indian Oil Corp. and Sinopec, continued to receive the largest volume of oil under the term contracts, with both companies set to receive 60,000 barrels a day each.

Copyright (c) 2012 Dow Jones & Company, Inc.

WHAT DO YOU THINK?

Post a Comment Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
Abiodun | Jul. 16, 2012
All we see is the contracts but no jobs!! Whats happening to my dear country.

Biodun Ashiru | Jul. 16, 2012
Its interesting to know that the Nigerian content act is been adhered to; however I hope it is followed through, even if not to the last detail @least to a reasonable extent that will foster growth in this sector of the economy. Create jobs genuinely, improve living standard, earn money legitimately while eschewing fraudulent acts. Indeed this is a brave move and I hope the Nigerian companies would live up to expectation. Cheers

Ese Ovie Tanureri/Loss Prevention Engineer | Jul. 16, 2012
The establishment of the Nigerian Local Content Act in 2010 is a welcomed development. This act will permit an increase in the level of local participation in the Oil & Gas sector as this will encourage economic expansion and technological development. I would like to advise that this status be enforced appropriately and constantly.

Anthony Ramsarran | Jul. 16, 2012
The Nigerian Content Act even though it is a good policy for Nigeria, is going to hurt the Nigerian oil industry. The business mentality is about getting in on contracts through political connection, corruption and nepotism with insufficient expertise. Nigerian local business environment is lacking in quality, service and real professionals for desired outcome. There are too many negative variables accompanied with zero oversight or so called oversight where auditors are all on the take. This is a disaster and the government is aware of this problem and while the NNPC is all about lining their pockets and conducts business like a state within a state

matthew | Jul. 15, 2012
My own version of it goes thus: the bill and contracts have been signed. №ω why are there still unemployed geologists and engineers flooding the nigerian labour markets? Ȋ̝̊̅t̶̲̥̅̊s a shame that this so called norm has dug a very big rot in the Nigerian system whereby only a chosen few get to eat from the so called National cake and as a result deluding the future of the Nigerian state

UBONG EMMANUEL DAVID | Jul. 14, 2012
affter the supply deals will this money go round our nation development?

iyke | Jul. 13, 2012
The local content aspect should be monitored religiously in order achieve the goals of enacting it else, we would end up enriching the other richer nations especially now that many european nations are having economic crisis of varying dimensions.


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