Nigerian companies win big in $40 billion oil lifting contract awards

April 23, 2014 | Contracts, Government & Regulations, Nigeria

Abuja, Nigeria | – Nigeria’s state-owned national oil company, the Nigerian National Petroleum Corporation (NNPC) has awarded yearly crude oil lifting contracts worth about $40 billion to mostly Nigerian companies, and by so doing, downsizing contracts awarded to international oil traders.

In a break with tradition, no contracts were given directly to foreign traders such as Glencore, Trafigura and Vitol, with only Switzerland’s Mercuria winning a contract, according to a list obtained by Reuters news agency. By this development, global traders need to partner with the local companies to access crude from Nigeria, Africa’s top producer.

The crude lifting contracts cover around 340 million barrels of oil, worth close to $40 billion annually based on current Brent prices, and run for a year, though they can be renewed. They were allocated to just 28 companies, as against about 50 in 2012.

The list, released by the NNPC, according to the newswire is preliminary and subject to revision. A senior oil trading source who formerly bought Nigerian crude oil, was quoted by the newswire to have said was “incredible to have an OPEC member selling its oil this way. There’s one international trading house and barely any refiners on the list.”

Several Nigerian oil companies that featured on the annual list for the first time include oil trading company Hyde Energy, oil and gas firm Springfield, and Barbedos Group, a conglomerate that also provides luxury aviation services. Also, Nigerian oil trading firms Taleveras and Aiteo were also named on the list, which was circulated to winners last week.

Nigeria’s policy has been to increase the role played by local firms, both in operating oil blocks and trading, with the official aim of ending decades of control over the business by foreign majors.