ON Wednesday, the Nigerian National Petroleum Corporation, NNPC extended its contracts by six months with private oil marketers to swap crude oil for imported petrol, according to a Reuters report.

The initial contract details sealed in October 2019, had involved an exchange of more than 300,000 barrels per day between the 15 listed companies and was expected to expire in October.

According to the report, the oil companies renegotiated the price agreement terms with the NNPC due to changes to fuel prices which involved an extension of the earlier contract by six months.

NNPC’s crude swap deals, which were previously referred to as offshore crude oil processing agreements (OPAs) and crude-for-products exchange arrangements, are now known as Direct Sale-Direct Purchase Agreements (DSDP).

The Direct Sale of Crude Oil and Direct Purchase of Petroleum Products, DSDP, scheme was introduced in 2016, which since its inception had facilitated the supply of over 30 million metric tons of petroleum products exchanged for crude oil represents over 90 per cent of the national requirement.

The swap deals have supplied virtually all of Nigeria’s petrol for the past three years, but the removal of capped prices means that subsidy removal would enable the private oil marketers to begin importing again.

Timipre Sylva, the minister of state for petroleum resources, says the country will save N1 trillion annually from fuel subsidy removal that can be used to improve the lives of Nigerians but locally refined petrol could be a game-changer.

“For now, our supply is coming mostly from imports as we all know. And that doesn’t really have an impact on the price as people would think.

“The only difference that will happen if our supply was coming from in-country would have been the freight price.

“But whether it is coming from outside or coming from within, it will be about the same cost because when you import, the only difference is that you will have to pay the freight,” he said.