Latest figures from Nigerian National Petroleum Corporation (NNPC) showed that a total of 150.4 million barrels of crude oil valued at N3.04tn was swapped for refined petroleum products by the corporation between September 2018 and September 2019.
In terms of crude oil refining, Nigeria’s refineries are operating far below capacity and so the NNPC swaps crude oil with qualified companies, who in turn refine the commodity and supply refined petroleum products to the corporation.
The swap scheme is known as Direct Sale (of crude oil) and Direct Purchase (of petroleum products). The petroleum products that are delivered by the qualified companies are usually equivalent in value to the crude oil received from the NNPC.
Analysis of the NNPC’s most recent financial and operations report for October 2019 showed that the oil firm had been maintaining the DSDP scheme to ensure there is no disruption in domestic supply of refined petroleum products.
It was also observed that the volume of crude swapped by the corporation in September 2019 was 5.95 million barrels higher than what was recorded in September 2018. In September 2018, the oil firm swapped 8.54 million barrels of crude oil, but this increased to 14.49 million barrels in September 2019.
The report further stated that in September 2019, the NNPC lifted 10,665,632 barrels of crude oil from the daily allocation for domestic utilisation translating to an average volume of 355,521 barrels of oil per day in terms of performance.
There had been concerns on the abysmal performance of Nigeria’s refineries, a development that had made the corporation to swap crude with other companies in order to get refined products.
According to NNPC, 10,665,632 barrels of crude oil were processed under the Direct-Sales-Direct Purchase scheme, while there were no deliveries to the domestic refineries for processing. This step was taken in order to meet domestic product supply requirement for the month of September 2019.
Petroleum and Natural Gas Senior Staff Association (PENGASSAN) is of the opinion that the Federal Government should channel the funds spent on petrol subsidy to making the refineries work. PENGASSAN’s spokesperson, Fortune Obi, said: “PENGASSAN has always called on the government of the day to ensure that our refineries are functioning optimally. The humongous amount spent on petrol subsidy should be invested in our refineries.”