NNPC Denies Colluding with Oil Traders on Shady Deals

The Management of the Nigerian National Petroleum Corporation (NNPC) has denounced the recent report by Swiss-based NGO (The Berne Declaration) accusing the corporation of colluding with some local and international oil traders to execute unfair industry practices.

Speaking with journalists in Abuja, Acting Group General Manager, Group Public Affairs Division of the Corporation, Tumini Green stated that the publication is not only bogus but strewn with inaccurate and poorly researched data, which defies common sense and verifiable evidence on ground in Nigeria.

“For instance, how can anybody who claims to be a close observer of the Nigeria oil and gas industry say that the process leading to the award of Term Contract for lifting of Nigeria’s crude is shrouded in mystery when it is common knowledge that the call for tender for this contract is periodically published by almost all the newspapers in Nigeria via paid advert placements by the NNPC,” Green wondered.

“In practice, the corporation sells Nigerian Government equity crude oil to Lifters/Traders engaged on Annual Term Contract basis. At present, there are about 50 such term contracts.

“No company has a monopoly or exclusive right to lift any quantity of Nigerian crude oil. The process of selection of Traders/lifters is competitive and transparent. Traders lift crude oil according to the terms of Contractual agreements applicable to all traders, among others on (Free on Board) FOB basis and proceeds paid directly into designated Central Bank of Nigeria Crude oil sales accounts.”

She also denied that Nigeria’s crude is sold to some companies at special discounted rate.

“Nigeria Crude Oil is sold at published Official Selling Price (OSP), which is not only benchmarked against the internationally recognized pricing institution, Platts daily publications, but also fixed after a critical analysis of market fundamentals and price determinants at global level,” she said, adding that “OSP differentials are crude stream determined and cannot favour an individual or group of traders as being insinuated.”

Green thanked the Nigerian media for their sustained show of support for the growth of the oil and gas industry while appealing to them to always resist the temptation of endorsing foreign media reports about the industry as gospel truth.

In a report titled, Swiss Traders’ Opaque Deals in Nigeria, Swiss-based non-governmental advocacy group, Berne Declaration, accused NNPC of robbing the country of several billions of dollars in connivance with major oil trading companies based in the European nation.

The report particularly indicted Vitol and Trafigura, two major oil traders in Switzerland, and seven Nigerian oil importers of creating offshore subsidiaries referred to as ‘letterbox companies’ to defraud the country of over $6.8bn in subsidy payments between 2009 and 2011 — in addition to such activities as ship-to-ship transfer to create untraceable paperwork, payment of subsidy money to non-existing importers, and partnering with politically exposed fraudsters.

“Every year, the Nigerian state coffers lose billions of dollars as large volumes of oil are exported for well below the market price, and the subsidy scheme for imports of refined crude oil products is systematically defrauded,” a part of the report stated.

“Ongoing investigations by the Nigerian authorities show that those Swiss traders dominant in oil exports have been making good business with dubious Nigerian import firms.

“The all-powerful national company, the Nigerian National Petroleum Corporation, categorised as the most opaque national oil company on the planet, itself is evidence of Nigeria’s ‘resource curse’ at work.

“The extent of the problem is illustrated by the fact that the NNPC has not published detailed financial reports since 2005! But this company, with its dozen subsidiaries operating at all levels of the supply chain, from production to distribution, cannot be ignored by anyone wanting to produce, export or import crude oil or petroleum products in Nigeria. It is here that Swiss commodity traders occupy a position of choice.”