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PPMC Allocates 210,000bpd For Crude Oil Agreements



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* Says Local Refineries Under utilise 445,000bpd

Teddy Oscar, Abuja

The Pipelines and Product Marketing Company (PPMC) on Wednesday told the House of Representatives’ Sub-committees on Petroleum Resources (Upstream), Petroleum Resources (Downstream) and Justice that it (PPMC) allocates a total of 210,000 volume of crude oil per day to service the different refinery agreements it has entered into on behalf of Nigeria.
This is even as the company has hinted that the 445,000 barrels of crude oil that are allocated to it on a daily basis are not fully utilised by the local refineries.

Mallam Haruna Momoh, PPMC managing director, who made the disclosure before the House sub-committees, also hinted that frequent pipeline vandalism is responsible for the epileptic nature of the nation’s refineries.

According to Nomoh, the Nigerian National Petroleum Corporation (NNPC) entered into three agreements to exchange the unutilised crude oil volumes for refined products to satisfy domestic consumption.

“The 445,000 barrels allocated to PPMC per day is not fully utilised by the local refineries. NNPC had to enter into agreements to exchange the unutilised crude oil volumes for refined products to satisfy domestic consumption through offshore processing agreement (OPA)and SWAP arrangements,” Momoh added.

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He said that: “NNPC entered into Offshore Processing Agreement (OPA) with with Messrs S.I.R. on September 1, 2010. Under the agreement, PPMC allocates 60,000 barrels of crude oil per day to S.I.R. for processing at their refinery located in Ivory Coast.

“NNPC-PPMC entered into crude oil/products exchange agreement with Messrs Trafigura Beheer B. V on September 1, 2010. PPMC allocates 60,000 barrels per of crude oil to Trafigura in exchange for the delivery of refined products.

“The crude oil refined products exchange agreement with Duke Oil Company Incorporated started on February 1, 2011. PPMC allocates 90,000 barrels of crude oil to Messrs Duke Oil Company Incorporated in exchange for the delivery of refined products equivalent to the value of crude oil,” he said.

Providing further information, Momoh said: “NNPC delivers two crude oil cargoes per month, representing 60,000 barrels per day in cargo size of approximately 950,000 barrels each to S.I.R. The crude oil is refined at a processing fee of $2.20 per barrel, and S.I.R. delivers the refined products (PMS and DPK) to PPMC in cargo sizes of 27,000 metric tons and 38,000 metric tons.”

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Momoh pointed out that NNPC imported petroleum products on the basis of open account through tender process from reliable oil trading companies prior to the introduction of OPA and SWAP.

He explained the genesis of fuel scarcity, especially in 2009/2010 with the attendant negative consequences to the economy.

“PPMC started witnessing default from oil traders during the open account, especially around winter months when Nigerian specs of gasoline is expensive and high freight cost. The open account also exposed PPMC to certain vulnerable market conditions, where suppliers request PPMC the payment of premium as high as $116 per metric ton for two ports discharge and $122 per metric ton for Calabar deliveries,” he said.

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