Scrapping Oil Swap Deals Could Save Nigeria $14M Per Day

Scrapping Oil Swap Deals Could Save Nigeria $14M Per Day

From The Guardian

Move by the President Muhammadu Buhari administration to terminate the controversial offshore dispensation and oil swap agreements may save the country an average of 230,000 barrels a day. At a market price of an average of $60 per barrel, the country would be saving about $13.8 million of crude oil daily.

Nigerian National Petroleum Corporation (NNPC) data show that the corporation allocated just over 79 million barrels (or roughly 218,000 barrels a day) to swaps in 2011 alone. This accounted for nearly half of the Domestic Crude Allocation (DCA) and around a tenth of the country’s average daily production.

The 2011 data also indicated that the volume of oil involved in swaps was worth approximately $9 billion.

New York-based Natural Resource Governance Institute estimated that between 2010 and 2014, Nigeria channelled over 352 million barrels of oil worth a total of $35 billion into the swaps.

Also, the Nigeria Extractive Industries Transparency Initiative (NEITI) disclosed recently in an audit report that more than $500 million was lost by the Federal Government through fraudulent activities in the management of crude oil swaps over the years.

The audit report further showed that crude oil worth $6.4 billion was swapped in 2012, while the value of refined products was $6.3 billion, bringing total revenue loss to the Federation Account from 2009 to $500 million.

According to the audit report, Nigeria lost over 23 million barrels of crude valued at over $2.6 billion in 2012 alone.

Read more at The Guardian