British Petroleum (BP) on Wednesday in Abuja, signed an agreement with Nigeria’s state oil firm for the supply of 20 percent of the country’s petrol import.
Despite being Africa’s largest crude producer, Nigeria relies on importation of petrol for local consumption. The country’s petrol consumption is estimated to be between 35-40 million litres a day.
Nigeria exchanges crude oil with international oil traders for imported petroleum products over a period of time, an initiative the Nigeria National Petroleum Corporation (NNPC) termed the Direct Sale-Direct Purchase (DSDP) agreement.
The NNPC says it entered into a six-month DSDP with BP trading arm, BP Oil International Ltd, as part of measures to sustain the supply of petroleum products across the country and especially going into the Yuletide period.
With the pump price of petrol regulated at N145 a litre, private oil marketers stopped importing petrol as it became impossible for them to remain in business after the landing cost exceeded the pump price. The development saw the NNPC became the sole importer of petrol, following which it adopted the DSDP initiative to argument forcasted shortfalls.
Speaking shortly after a brief signing ceremony at the NNPC Towers, the Group Managing Director of the corporation, Dr. Maikanti Baru, said “As the nation’s products supplier of last resort, NNPC is committed to products availability by inviting new and old players to play in the Nigerian oil sector.”
He said over the years, BP had demonstrated the capacity and robustness to augment the forecasted shortfall by NNPC, “especially as the winter period approaches and as the nation’s elections get underway early into the New Year.”
“As a reliable supplier, we think BP is a brand that we can always partner with. We trust the company and we have a good relationship with it. We also believe in the company’s commitment towards the development of local content,” Baru stated.
He further commended BP for choosing to partner with AYM Shafa, a local oil company, which had been expanding its downstream footprints across the nook and cranny of the country.
“BP’s partnership with AYM Shafa towards delivering on its DSDP obligations makes it a perfect fit for our plans to ensure that there is adequate supply of products throughout the coming Yuletide and even beyond the election period.
AYM Shafa is a local company with over 150 retail outlets, depots as well as a good network of trucks nationwide,” Dr. Baru said.
Mr. John Goodridge, the Head of Marketing & Origination of BP’s oil trading business, said, “We are delighted to have the opportunity to work more closely with the NNPC. Going forward, we hope to grow this mutual relationship to greater things.”
He assured that BP boasts of a global network of refineries capable of generating the products to meet the specifications required by the NNPC. The ultimate, he said, was to ensure that over the next six months, Nigeria does not witness any products shortages.
Introduced in 2016, the DSDP arrangement is a model carried out through direct sales of crude oil to refiners or consultants, who in turn supply NNPC with equivalent worth of products.
According to the NNPC, since inception, the DSDP model has not only saved it millions of dollars that would have been paid through demurrage, it has also proven to be a major component of its petroleum products supply portfolio.
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