By: Oluwagbenga Bankole
Lagos Chamber of Commerce and Industry (LCCI) and stakeholders in the Nigerian Oil and Gas industry have supported the exchange of crude-for-products exchange arrangement popularly referred to as crude swap for Direct-Sale–Direct-Purchase (DSDP) arrangement which would take off next month.
The Minister of State for Petroleum Resources and Group Managing Director of the Nigerian National Petroleum Corporation, Dr. Ibe Kachikwu while disclosing this when he appeared before the House of Representatives Ad-Hoc Committee set up to investigate the Corporation’s offshore processing and crude swap arrangement for the period between 2010 to date at the National Assembly Complex, Abuja noted that the DSDP was adopted to replace the Crude Oil Swap initiative and the offshore processing arrangement so as to introduce and entrench transparency in the crude oil for product transaction by the Corporation in line with global best practices.
The Minister stated that the DSDP option eliminates all the cost elements of middlemen and gives the NNPC the latitude to take control of sale and purchase of the crude oil transaction with its partners adding that the initiative would save one billion dollars for the Federal Government.
While speaking exclusively with our correspondent, the Director General of LCCI Mr. Muda Yussuf said that the move is a welcome development.
Yussuf also said that; “Kachikwu is a professional and technocrat in this area and I want to believe that whatever choice NNPC decided to make under his watch will be to the best interest of the country. He understands the industry more than some of us. I don’t doubt his judgement on things like this. I think it is a welcome development.”
The Managing Director of Platform Petroleum one of the Marginal Field Operators in Nigeria Mr. Owieadolor Osariemen told our correspondent that the choice of DSDP is a step in the right direction.
Osariemen said that from the look of things it is obvious that the crude oil swap modem must have been seriously politicalised and the appropriate terms that were applicable were not done in the interest of the country.
Also speaking with our correspondent, the Managing Director, Offshore Dimension Mr. Seun Faluyi said that if there is more transparency in the process it will save contracting efficiency.
According to him, the crude oil swap agreement has been done in an atmosphere that is not transparent, adding that the DSDP Purchase is more transparent and it will bring some benefits to the country.
While speaking with our correspondent, the boss of Petrocam Oil Trading Limited, Mr. Patrick Ilo said; it is really not a new thing. That is what we have been doing before and it is the easiest form of oil trade. It means you pay for what you buy and NNPC in return will pay for what they receive from you.
He acknowledged that it is a very good system and not complex or cumbersome, saying that government will be able to earn foreign exchange and budget on how much they actually receive and how much they are sending out.