In 2021, the Nigerian National Petroleum Company Limited (NNPCL) engaged in crude oil swaps valued at N2.6 trillion for refined petroleum products, according to recent data from the Nigeria Extractive Industries Transparency Initiative (NEITI), a federal government agency.
The 2021 Oil and Gas Report from NEITI reveals that during the same period, the NNPCL did not supply any crude oil to Nigeria’s domestic refineries.
NNPCL’s crude-to-product exchange
This non-supply, NEITI suggests, might be due to the fact that the refineries were not operational at the time.
Nigeria’s refineries in Port Harcourt, Kaduna, and Warri have been non-operational for several years, although rehabilitation efforts are currently underway.
Under the Direct Sale Direct Purchase (DSDP) program, initiated in 2016, the NNPCL exchanged Nigeria’s crude oil for refined products.
The report indicates that crude oil sales receipts in 2021 amounted to N2.23 trillion.
According to NEITI, the NNPCL allocated 98.92 million barrels of crude oil valued at $7.11 billion (N2.73 trillion) for the local market in 2021.
However, no crude oil was delivered to local refineries during that year. Instead, 95.25 percent of the allocated crude was exchanged for products on the international market under the DSDP arrangement, while the remaining 4.75 percent was sold internationally.
NEITI’s report also highlights the financial implications of these transactions, emphasizing that they occurred due to the inoperability of the domestic refineries.
It noted that the actual domestic crude sales receipts in 2021 amounted to N2.23 trillion ($5.85 billion).
Additionally, the NNPCL lifted and exported 24.84 million barrels of crude oil worth $1.70 billion on behalf of the Federation in 2021.
Out of this, $1.58 billion was traced to respective bank accounts as actual sales receipts for 2021, while $24.32 million represented the settlement of prior year receivables.
Operators in the downstream sector have called on the Nigerian government to prioritize the revival of the country’s refineries.
They argue that this would reduce pressure on the national currency, eliminate the need for the DSDP arrangement, and ensure a stable supply of refined petroleum products within the country.