Nigerian National Petroleum Corporation (NNPC) through its subsidiary Duke Oil has sealed a pact to supply 30,000 barrels per day crude oil supply to Indonesia’s state oil corp, Pertamina, and Indian Oil Corporation.
The development, which will strengthen the nation’s revenue outlook is coming in the face of the volatility and uncertainty in the oil industry.
The move, which also signals the nation’s attempt to capture market share in Asia countries may push the profit of the entity to about $70 million in the 2021 trading year.
Managing Director of NNPC Trading Company Limited, Lawal Sade, who disclosed this in the latest edition of NNPC Quarterly Magazine revealed that its oil trading entity, Duke Oil, has diversified its trading portfolio and adopted alternative trading strategies to increase its volumes and profitability.
Sade revealed that the subsidiary has concluded plans to take part in upstream third-party financing for direct access to Nigeria’s equity crude oil as well as securing 120,000MT of storage and blending facilities offshore.
The subsidiary is also expected to expand into expanding into bitumen and base oil importation in the 2021 trading year.
Sade disclosed that the move has already seen the gross revenue of the entity growing to N28 billion against a budgeted figure of N16 billion. Despite the Covid-19 pandemic last year, the development led to additional N12 billion income.
“Further from the impacts of COVID-19 and the thinking-out-of-the-box his management adopted, the company made remarkable inroads into the Asian market as a secured off-taker of Nigeria’s crude. From this, supply deals were hammered out with refiners in India amongst others.
“Based on this performance, Duke Oil has set its eyes on leveraging the inroads made in the Asian and Middle East market for sale of Nigeria’s crude oil grades.
“It is thus poised to secure term contracts for the supply of 30,000bpd of oil to Indonesia’s Pertamina, partake in Indian state-owned refineries crude oil purchase tender and develop counterparty business relationship with other Middle Eastern state-owned oil enterprises,” Sade disclosed.
He disclosed in the report that Duke Oil would focus on growing crude oil and petroleum products trading activities by expanding its importation and sale of crude oil and petroleum products offshore and developing a trading hub offshore Lagos amongst others.
“The company also hope to undertake active participation in derivative markets, by registration and engagement with major trading houses while commencing derivatives trading to manage price risks.
“Ultimately, in 2021, NNPC Trading Management is geared towards activation of a robust business plan & automation and organizational structure to support the business expansion activities through,” the publication stated.
On the cost containment plan, it added that Duke Oil intends to cut demurrage cost by 25 per cent through proper planning and scheduling of shipments with optimal operational efficiencies in alignment with relevant stakeholders.’
The report said that the subsidiary intends to cut administrative expenses by 15 per cent through contract renegotiation strategy and online meetings.