President Muhammadu Buhari has approved the cancellation of offshore processing and crude swap deals for refined oil products between the Nigerian National Petroleum Corporation (NNPC) and oil traders, the Presidency said on Tuesday.
The deals, initiated in January by Buhari’s predecessor, Dr. Goodluck Jonathan, were designed to supply gasoline for crude as Africa’s top oil producer relies on imports for the bulk of its domestic consumption.
Nigeria is often chronically short of gasoline, as its neglected refining sector operates well below capacity.
Nigeria allocated 210,000 barrels per day of crude to swap for products in 2015.
“The President has approved the cancellation of the oil swap contracts. Mr. President has publicly expressed his displeasure over this oil swap deal,” presidential spokesman, Femi Adesina, said.
A source at NNPC told Reuters that the president cancelled contracts for roughly half of the 445,000 barrels per day of crude earmarked for Nigeria’s refineries — the amount refineries use in the products swaps deals.
“The government may not have completely dumped the idea of swaps but the aim is to re-evaluate the whole contracts terminated to extract some favourable terms,” the source told Reuters.
Crude-for-products swaps became controversial after several Nigerian officials raised questions about their transparency, including the Nigeria Extractive Industries Transparency Initiative, an EITI affiliate, and former Central Bank of Nigeria governor, Lamido Sanusi.
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