About 278 oil firms participated in the bid for the sale and purchase of crude oil grades opened by the Nigerian National Petroleum Corporation (NNPC) on Tuesday.
The commencement of the bid follows disclosure by the NNPC Group Managing Director, Dr. Ibe Kachikwu that the corporation would this week sell-off the over 20 cargoes of crude oil that have been in the market since the end of last year.
According to NNPC Group Executive Director ( GED) Commercial and Investment, Mr. Babatunde Adeniran, the bid becomes very crucial at this moment, owing to the fact that “Nigeria has over 20 unsold cargoes in the market, at the end of last year.”
The NNPC, he said, is now on the path of transparency, accountability and probity.
Group General Manager, Crude Oil Marketing Division, Malam Mele Kyari, also explained that the Muhammadu Buhari led Federal Government is strategising to balance the pricing of crude.
According to Kyari, the bidding would impact on the pricing of oil in the international market, adding that the deal will now make the Nigerian crude predictable.
He said the current volume of oil that the Federal Government is entitled to from the production stream is 960,000 barrel per day (bpd) saying NNPC will limit its contracts to that bracket. “NNPC is attempting to ensure that the crude ends up in the procession of the ultimate buyers in order to avoid the present shock in pricing,” he said, stressing that the corporation will ensure that Nigeria is not a major contributor to her own pricing instability.
According to him, credible buyers are absent from the market and it has culminated in a situation where individuals hoard cargoes.
Kyari lamented the situation “in which you have oversupply- fake oversupply that doesn’t exist and then the market reacts to that and then you have lower value.
He went further: “We have to make sure that we optimise the value of our crude. And for you to do that, you must have credible and reliable customers. And these customers also need you, mind you, they need to lock up their deals. They call them deals. “What that means is that they have buyers who take up from them and they need to be guaranteed. They need some level of stability that will enable them plan with it.”
The NNPC, according to him, recorded 43 buyers in the past, which made it impossible for it to guarantee its monthly off-take to customers. However, with the present bidding process, he stressed, the government is pruning the number to 16 to stabilise the market and satisfy the customers.
He said the corporation will guard against selling to one category of buyer in order to forestall hoarding of crude.
By Olisemeka Obeche (with agency reports)