NNPC Extends Commencement Of Direct Sale Of Crude Initiative To April

The Nigerian National Petroleum Corporation (NNPC) has shifted the date for the planned commencement of its new crude oil trading and products sourcing arrangement, the Direct-Sale-Direct-Purchase (DSDP) to April.

The NNPC said in a statement signed by its spokesman, Garba Deen Mohammed that it was carrying over the interim swap to the first week of April when the DSDP will commence.

This, however, would make it the second time that the date has been shifted, having moved it from December 2015 to the first week in March 2016 when the Minister of State for Petroleum Resources, Ibe Kachikwu, said the DSDP would start.

“For long-term solutions, the NNPC and the government is working to put in place machineries to ensure that our refineries are fixed and working optimally, while the pipelines which have been under attack for some time now are repaired.

“The Direct Sale Direct Purchase (DSDP) arrangement for crude would commence in the first week of April and all these coupled with the fact that the President has given his support to increase the crude supply to NNPC to ensure local sufficiency of products will go a long way to solve the problems in the short and long term,” said NNPC in the statement.

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While the NNPC under the old order exchanged crude for petroleum products through third party traders at a pre-determined yield pattern, the DSDP accordingly obliges it to allocate a certain volume of crude oil within the period for refining at offshore locations in exchange for petroleum products at pre-agreed yield pattern.

Meanwhile, a team of experts from the International Institute for Petroleum Energy Law and Policy (IIPELP) said that the plan to set up strategic reserves of petrol to cushion in-country shortages was not entirely new to the country.

“Basically, the concept of strategic reserves is already embedded in the design of the pipelines, refineries and the storage system.

“So, that concept is not new, it was built in the designs when the refineries were built and linked with a pipeline system to support it. The design of that pipeline system had two purposes, one was equalisation and so you have the Petroleum Equalisation Fund, which is a refund and the tariff that is paid is on a postage stamp approach so that the products can be sold on same price levels across the country,” the IIPELP experts said.

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They explained further that: “The pipeline design was meant to do that, and attached to the pipeline and the refineries are storage systems and so when you produce, you store, and in places where there is less supply, you could call on what you have stored and then you restore the balance subsequently.

“Attached to that system is the Atlas Cove Single Point Mooring (SPM), which you can supplement through importation. So, this is a classic case of something that was very well designed and built with a network and a storage system backing it. And so, the strategic reserve is already in place; what is not functional now is a lack of a commercial framework.”

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