Sahara Raked the Highest Losses in Crude Oil Processing - Africa’s premier report on the oil, gas and energy landscape.

Sahara Raked the Highest Losses in Crude Oil Processing

By Sully Manope, in Abuja

Of all the four, loss making Offshore Processing Arrangements (OPAs) for Nigerian crude, the deal between NNPC and the Sahara Group incurred the most debit in 2015, NEITI has reported.

The country as a whole lost over $723 Million in the year to those arrangements, forged between the Petroleum Product Marketing Company (PPMC), a downstream subsidiary of the state hydrocarbon company NNPC, and each of four companies, namely: SAHARA, AITEO, Duke Oil and NAPOIL, the 2015 audit report of the Nigerian Extractive Industry Transparency Initiative (NEITI), has disclosed.

The report, released in Abuja in the closing weeks of 2017, indicated that the arrangement with SAHARA Petroleum incurred a loss of $323,129,180.50; the AITEO arrangement recorded a loss of $221,095,575.24; the DUKE OIL arrangement recorded a loss of $160,658,295.07 ($, whereas the NAPOIL arrangement recorded a loss of $44,553,458.59 ($44.5Million), making a total loss of $723,285,929.70. The exception to these losses was the arrangement with CALSON, where PPMC made a profit of $26,150,579.70.

OPA is one of several options used by NNPC to import supplies of petroleum products in exchange for Nigerian crude. The Nigerian populace consumed 18.2Million Tonnes Per Annum (MMTPA) of petroleum products in 2014, of which 71% or 12.9MMTPA was gasoline. But the country’s government owned refineries cannot refine the requisite volume of crude to deliver these volumes, so NNPC resorts to these crude oil for petroleum product deals to satisfy the market.

Yet huge losses like this make the country’s vocal, intellectual minority dismiss those deals as nothing but ways of siphoning public funds.
OPA had been used before, then discontinued. Just prior to its reincarnation in 2015, the option used by NNPC was Crude-Product exchange also known as SWAP. It was discontinued in 2015 while OPA was re- initiated, to process white fuels PMS, AGO, and DPK at cost and sent back to Nigeria. The offshore refineries retain and pay for other products such as VGO, LPFO, Fuel Oil, Propane, and Butane at the current market price to NNPC.

NEITI’s 2015 audit report disclosed that Grand total losses from 2010 to 2015 for OPA and SWAP have been $2,549,328,360 ($2.54Billion). “NNPC benefited from NIGERMED arrangement in 2010, however discontinued the contract in 2011”, the report says, adding that the country’s loss because of the combined OPA and SWAP arrangements peaked in 2011 at $928,868,083 ($928.8Million). The highest loss in terms of the OPA arrangement in any year, however, was the $723,285,930 ($723.3Million) loss in 2015.

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