Corporation opens public bid for sale of crude oil grade

The Nigerian National Petroleum Corporation (NNPC) on Tuesday in Abuja conducted the public opening of bids tendered by Nigerian and international companies for the purchase of Nigeria’s crude oil grade.

The News Agency of Nigeria (NAN) reported that a total of 278 local and international companies submitted bids for the purchase of the nation’s crude oil grade.

The NNPC, in a bid to ensure transparency in the conduct of its business, had also conducted an open public bidding for 101 Nigerian and multi-national companies for the award of Offshore Processing Arrangements (OPA).

Prices of Nigeria’s crude oil grades have recorded significant decline over the last two weeks, fuelling concerns over the ability of the country to meet its revenue target and fund its budget.

NNPC’s Group General Manager, Crude Oil Marketing Division, Mr Mele Kyari, noted that the public opening of the bid was designed to ensure the optimisation of value of the nation’s crude.

He said the aim was also to ensure the emergence of credible and reliable customers to the purchase of Nigerian crude oil.

Kyari said that the process would also ensure that the ultimate end users of the crude had access to it.

He also explained that the exercise would also ensure that Nigerian crude did not become a major contributor to the instability in the price of oil in the international market.

He said that the absence of credible buyers of the nation’s crude had resulted in a situation where people who bought crude cargoes knew little or nothing on how to utilise the crude.

This, according to him, has resulted in the lower value of the crude in the market.

Kayari also noted that the exercise would trim down the number of successful buyers from the previous 43 to 16.

"So our objective is to cut down that number and cutting down the number means that you have to come down to the region of 15 or 16.

"Once you are able to do that as a market strategy, then you need to sell to people in groups."

According to him, those expected to emerge in the process would comprise the market refiners, who are the uptakers, the international trading companies and downstream indigenous companies operating in Nigeria.

He added that the opening of the bid would also affect the international crude market.

"The market will react; from what we are doing, the moment the world realises that Nigerian crude supply will be stable and be predictable, the sale from January will reflect," he said.

He said that the sale of the crude would be limited to the Federal Government’s entitlement of 950,000 barrels a day.

NAN also reported that The Nigerian Extractive Industry Transparency Initiative (NEITI) was present to monitor the bid process.