Of the 445,000 barrels of crude oil per day brought by NNPC to meet its domestic crude refining capacity, slightly under 50 per cent is swapped with commodity traders in exchange for petroleum products which are imported into the country. The other 50 per cent is supposedly refined by NNPC's refineries.
However, the state-run oil company has said contrary to claims by a Swiss-based non-governmental organisation (NGO), Berne Declaration, that 36 per cent of its crude oil is lifted by
The corporation also denied that the federal government lost
Speaking yesterday before an ad hoc committee set up by the House to investigate the allegations made by the Swiss NGO, the Group Managing Director of NNPC,
"By our records,
Instead of foreigners dominating the oil deals, the NNPC boss said more chances were given to Nigerian traders, who "collectively accounted for 98.2 million barrels during the same period, other international traders including the Swiss trading companies accounted for 61.2 million barrels, while offshore and the Nigerian refineries took 36.2 and 38.3 million barrels respectively."
According to him, the selection of traders has standardised criteria, which evaluate buyers' facilities, volume of transactions, turnover and financial health of the companies that is applicable to all, including
He also added that the 2012/2013 term contracts had a preponderance of Nigerian trading companies with 23 out of the 40 regular buyers.
On the issue of NNPC colluding with Swiss-based traders to sell crude oil at below market price, Yakubu said: "Our pricing strategy is aligned to international best practices in the industry. Our prices are based on a reference to the benchmark crude Brent whose prices are published by Platts for the international trading community, a premium/differential for individual crude grades and the selection of an option."
He further added that the average of five consecutive days' publications by Platts provides about 97 per cent of the value of any of its crude blends, while differential/premium account for about three per cent of the total value.
"The differential/premium are established based on a wide range of publications (Platts, Argus, LOR, etc) and internal market assessment by the corporation for all crude grades.
"These processes apply to all buyers of Nigerian crude based on the terms prescribed in the General Sales Agreement entered by all parties. Overall, our assessment of the OSP (differential/premium) has matched or even exceeded the market value of Nigerian crude grade published by Platts, Argus and LOR, as exemplified in the following in the historical performance of the Bonny light since 2005," he added.
Yakubu, who debunked the Berne Declaration report as "trying to portray NNPC in bad light", said its claim that 100 per cent of Nigerian crude oil is sold through private traders was not true.
On the sale of unutilised crude oil at knockdown prices to Swiss companies through the crude oil-for-products exchange scheme (swap arrangement), Yakubu stated: "The NNPC Act mandates the corporation to supply petroleum products to the federation as supplier of last resort. In order to meet this obligation, 445,000 barrels of crude oil is assigned to the corporation at international price for domestic refining.
"The corporation disposes the unrefined portion of the assignment through direct exports or other secondary arrangements including swaps to ensure procurement and delivery of refined petroleum products," he said.
However, despite the insistence by NNPC that no losses had been made from its crude oil swaps, it has come to the open that the federal government may have incurred losses of a staggering
The ad hoc committee probing the alleged scam noted that in most cases, the foreign companies do not fulfill their own end of the bargain by refusing to supply refined products.
Documents given to journalists yesterday showed that NNPC allocated about 50 per cent of its 445,000 barrels of crude oil per day meant for domestic refining to the following companies -
In the process,
A report submitted to the committee by the Nigeria Extractive Industries Transparency Initiative (NEITI) also detailed how four of the oil traders "under-delivered" 500,075,239.3 litres of products in 2011.
They are: Trafigura (173,786,600 litres);
According to the report,
The report also showed that
However, the NNPC during its presentation at the hearing, stated that the crude oil-for-refined products exchange agreement with
It said the
According to NNPC,
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