Nigeria is reportedly owing about $3 billion to trading houses and oil majors for crude oil swap arrangements, through which the country imports petroleum products.
The country is also said to be four to six months behind schedule for the repayment in crude, four traders and executives told Reuters on Friday.
The direct sale direct purchase (DSDP) initiative is an agreement that allows the sale of crude oil to refiners, who will in turn supply the country with an equivalent worth of petroleum products.
Through the DSDP arrangement, Nigeria exchanges petroleum products for crude cargoes with major trading houses and international oil majors, including BP, TotalEnergies, Vitol, and Mercuria.
“Swaps will ultimately stop but not yet. We are getting our swaps crude cargo in October at the earliest,” Reuters quoted a major player as saying.
Two trading sources were quoted as saying the Nigerian National Petroleum Company (NNPC) Limited made a cash payment of around $200 million in May to some partners, adding that no further payment has taken place since then.
On June 4, Mele Kyari, group chief executive officer (GCEO) of NNPCL, was quoted as saying the company had commenced the termination of crude oil swap contracts and will pay cash for petrol imports.
The decision to pay cash for petrol imports follows the federal government’s removal of petrol subsidy and the subsequent issuance of petrol importation licences to interested companies — displacing NNPCL as the sole importer of petrol.
In 2022, petrol subsidy payments amounted to N3.3 trillion for 11 months.
The federal government had said it budgeted the sum of N3.36 trillion for the payments of under-recovery for petrol subsidy in the first quarter of 2023.
However, on June 1, 2023, Kyari said the federal government has not funded the petrol subsidies for 2022 and 2023, despite budgetary provisions.
In May 2023, Nigeria’s oil production increased to 1,183,691 barrels per day (bpd) — but is still below the 1.74 million bpd quota of the Organisation of Petroleum Exporting Countries (OPEC).
