Home Energy NNPC targets $5bn cash-for-crude prepayments with oil traders

NNPC targets $5bn cash-for-crude prepayments with oil traders

NNPC targets $5bn cash-for-crude prepayments with oil traders

. Hungary eyes Nigeria crude oil, LNG
Nigeria’s state oil firm, NNPC is looking to set up a $3.5-$5 billion cash-for-crude prepayment with some of the world’s top commodity traders to fund oil and gas upstream projects as well as related infrastructure.

Already cash-strapped and weighed down by billions of dollars in old debts, NNPC has been looking to bring in outside cash.The country also only recently started to climb out of its first recession in 25 years.Daily Champion learnt that Standard Chartered was hired to advise on the oil prepayment and a request-for-proposal was issued a few weeks ago for a $3.5-$5 billion loan to be repaid with crude over five to seven years.Sources said that a decision was expected before the end of this year. Around seven trading firms were still in the running, one added, with top trading houses Glencore, Vitol and Trafigura seen as being among the active contenders.The West African OPEC member is seeking three offtakers, one of the sources said, against 70,000 barrels per day of crude .Meanwhile, at a time that international crude oil market is getting more competitive, the Hungarian Government has indicated interest to purchase crude oil and Liquefied Natural Gas (LNG) from Nigeria.

The Hungarian Ambassador to Nigeria, Professor Gabor Ternak, who disclosed this during a courtesy call on the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr. Maikanti Baru, in Abuja, said the decision to import crude oil and LNG from Nigeria was informed by the need to bridge the current supply gap being experienced in Hungary.“Hungary depends on oil importation to serve its energy needs as the country is non-oil producing. We want to diversify our sources of crude oil and LNG import and we are considering purchasing these products from Nigeria,” Ambassador Ternak stated.

He said the Nigerian crude oil would be of great help to Hungarian Refineries involved in large scale commercial refining.
The Hungarian envoy stated that Nigeria could also leverage on the bi-lateral relationship with his country by engaging the services of Hungarian firms that specialize in repairs, maintenance and building of refineries as well as medical services.He said that Hungarian universities with many years of oil and gas engineering expertise, could assist Nigeria in the areas of capacity building of oil workers.

In his remarks, the NNPC GMD, Dr. Maikanti Baru, stated that the Corporation had commenced tendering process for the selection of the 2018 crude oil off-takers, adding that Hungarian companies could utilize the opportunity by participating in the exercise to maximize value from direct purchase, rather than going through a third party.

“If you don’t participate in the tendering process, you would have to buy the products from one of the traders. However, if you participate with companies and refineries that meet our requirements, they could be shortlisted as off-takers,” the GMD said.He explained that Hungary could purchase LNG through “spot cargo,” an arrangement in which excess production is given to registered off-takers with the Nigerian Liquefied Natuaral Gas Limited (LNNG).“Normally, gas business is a long term business and NLNG is not different, we already have existing 20-year contract that will expire by 2022. Nevertheless, we have what is called “spot cargoes”, when there is excess production, and the current contractors have gotten there share as enshrined in the contract, the excess production will be given to registered off-takers in the system,” Dr. Baru stated.

He said Hungarian companies could submit their profile to NLNG for possible engagement as off-takers of spot-cargoes after meeting the standard requirements.The NNPC GMD stated that works on refurbishment of the Corporation’s refineries through original builders of the plants had commenced and that the Hungarian firms with requisite expertise could be considered through subcontracting by the main contractors.He said that NNPC through its subsidiary institution, the Nigerian Leadership Academy (NLA), would look into possible areas of collaboration with the Hungarian Universities for in-country capacity building of oil and gas workers.

As part of the Corporation’s diversification plans, Dr. Baru said the NNPC, which has the largest medical facilities in the country from a single entity, was trying to put its 52 clinics across the country into commercial use, starting with its clinic in Abuja. He said NNPC would collaborate with Hungarian and other reputable companies that have proven capabilities to set-up world-class medical facilities for heart, spinal and brain surgeries as well as physiotherapy and specialized laboratories services that can compete globally and save Nigerians the burden of traveling abroad for treatment.

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