Oil and Gas

UPDATE 2-Nigeria's NNPC issues 2016 crude oil contracts worth $13.5 billion

(Adds quotes, context)
    By Julia Payne and Libby George
    ABUJA/LONDON, Dec 17 (Reuters) - The Nigerian National
Petroleum Corporation (NNPC) has issued its 2016 crude oil term
contracts to 21 companies, going directly to international
refineries, trading houses and local downstream firms, according
to a list obtained by Reuters. 
    The contracts cover 991,000 barrels per day (bpd) of oil,
worth $13.5 billion at current crude oil prices, which is
roughly half of Nigeria's crude oil production of around 2
million bpd. 
    The list includes refiners such as Spain's Cepsa, Italy's
Saras, India's IOC and ENOC of the United Arab
Emirates, as well as trading houses Trafigura, Mercuria and
Vitol and international oil companies ENI, Total
, Exxon and Shell.
    The remainder are Nigerian downstream and NNPC trading
    In a statement, NNPC said: "Apart from ensuring
transparency, the companies were carefully chosen based on their
track records and trading experience to ensure that Nigerian
crude cargoes are not left unsold."
    The list is pared down from the final 2015 contract list,
which comprised 43 companies and did not include any global
traders. Many of the mostly local companies included then were
criticised by international watchdog groups, such as the Natural
Resource Governance Institute (NRGI), as "unqualified
intermediaries" who added little value. 
    President Muhammadu Buhari is on a campaign to root out
corruption in the NNPC and oil theft across the nation, which he
assesses at about 250,000 bpd.
    During a televised launch of the contract process in
October, when 278 companies submitting bids for crude oil
contracts, NNPC officials promised to slash the number of
winners and conduct business differently.
    "Things have changed in Nigeria," said one oil industry
source close to the contract negotiations. "The process of
tendering has been more transparent they want to work with more
reputable companies."
    Oil traders said the inclusion of Exxon and Shell was also
    "It is the first time for both," one trader of West African
oil said of direct contracts between Exxon, Shell and NNPC. "It
seems to tie up with the drive to partner with end-users."
    NNPC's current managing director Emmanuel Ibe Kachikwu is a
former Exxon executive.
    The absence of China's Sinopec, and its trading arm Unipec,
was also notable, as it is a large buyer of Nigerian oil and was
on the 2015 contract list. Oil industry sources said there was
another list of so-called "government" contracts with Nigeria's
major partners yet to come, and many expected the company to be
added at a later date. 
    On Thursday, Kachikwu told reporters that Nigeria is
producing 2.1 million bpd and aims to boost output to 2.4
million next year. 
 Contract holder            Volume ('000 bpd)
 Emirates National Oil      60
 Indian Oil Corporation     60
 Cepsa                      60
 Saras SPA                  60
        International Trading Companies
 Trafigura                  32
 Mercuria                   32
 Vitol SA                   32
 IOC Trading Companies
 ENI Shipping and Trading   32
 Totsa SA                   32
 Exxon Sale and Supply      32
 Shell Western Supply and   32
         Nigerian Downstream Companies
 Emo Oil & Petroleum/China  45
 Northwest Petroleum and    45
 Forte Oil PLC              45
 Oando PLC                  60
 Sahara Energy Resouce LTD  60
 A.A. Rano Nigeria Limited  45
 Eterna Oil                 45
 MRS Oil and Gas            60
            NNPC Trading Companies
 Calson/Hyson               32
 Duke Oil Incorporated      90
 Total: 21                  991

 (Additional reporting by Ron Bousso and Alex Lawler in London,
editing by William Hardy and David Evans)