Nigeria awards $30bn crude oil supply deals

Nigeria has awarded crude oil supply contracts worth around $30bn (N4.5tn),\

with trading companies, Vitol, Trafigura and Glencore, landing some of the biggest contracts.

The Nigerian National Petroleum Corporation awarded term contracts for around

1.5 million barrels per day from its share of the country‘s oil production, Reuters reported.

Based on the current price of Brent crude oil, the total supply deals are worth around

$172m a day or $32bn for the June-December period, when trade sources said the

contracts would be valid.

Given crude supply disruptions from Libya, relatively stable Nigerian oil output

since a 2009 amnesty has increased the appeal of the country’s light, sweet oil

 and competition for contracts was fierce, trade sources said.

Strong demand has pushed cash prices of the benchmark Nigerian grade

Qua Iboe to more than two-year highs this month, making it among the most

expensive oil in the world.

”There were lots of arguments and infighting and trips out to Nigeria to arrange this,”

an unnamed oil trader working for a company appearing on this year‘s list told Reuters.

Trading firms Vitol, Trafigura and Glencore each won the biggest contract awarded for

60,000 bpd of crude oil.

This amounts to two crude oil cargoes a month.

Nigeria‘s production has been steady at around 2.6 million bpd over the past year,

the energy advisor to the President Goodluck Jonathan said this month.

Many African trading companies such as Delaney, Masters E and Elanoil

appeared on the 2011 list that were not previously term buyers, trade sources said.

But larger international trading firms might increase their allocations by buying out contracts

given to smaller African companies, they added.

”It used to be just the bigger firms that got the contracts, but the indigenous list is rising.

The big firms will be going around and trying to buy from the smaller ones,”

a West African crude oil trader told Reuters.

Some thought that the April elections could result in further contract revisions.

”The people in power can do what they want in terms of allocations.

There is room for change,” a second crude oil trader told Reuters.

Italian refiner, ERG, was awarded a contract to sell 30,000 bpd in a move that market

 participants saw as likely driven by the firm‘s need to replace lost Libyan barrels.

The firm was previously only a sporadic buyer of West African oil, a trader told

Reuters.http://punchng.com/Articl.aspx?theartic=Art201103312163815