Pres Buhari Terminates Oil Swap Agreements

With those words, President Muhammadu Buhari on 13th August cancelled the controversial offshore processing and oil swap deals initiated in January this year by the outgone administration of Dr. Goodluck Jonathan.

The agreement was earlier billed to last till December 2016.

President Buhari’s approval is in a bid by the new leadership of the Nigerian National Petroleum Corporation (NNPC) to ensure transparency and due process. 

In a memo to the President on August 12, the NNPC sought approval to terminate all such current contracts following a presidential directive.

“This memo purports to seek Mr President’s approval to terminate all current Offshore Processing and SWAP contracts and commence a fresh re tendering process to ensure transparency, due process and optimized contract terms in favour of the NNPC,” stated the letter signed by Ibe Kachikwu, the Group Managing Director of NNPC.

Responding, the president approved the request in a memo dated August 13 and signed by the Permanent Secretary of the State House, Nebolisa Emodi.

The NNPC currently swaps a part of its allotted 445,000 barrels of crude per day to some oil companies and in return receives refined products.

Oil swap derives from the fact that Nigeria’s four refineries operate mostly below 50% installed capacity and since 2003, the NNPC has continued to allocate them 445,000 barrels of crude oil per day, which corresponds to 100% capacity.

The oil swaps have come under criticism following allegations that they have been opaque and the government has been short- changed in the deals.