Nigeria shores up fuel needs with BP

Nigerian state oil firm NNPC said on Thursday it had signed a crude-for-product deal with BP for the next six months to help the country’s petrol needs over the holidays and ahead of its 2019 general election.

Despite being Africa’s biggest oil producer and an Opec member, Nigeria is almost wholly reliant on fuel imports as its refineries barely function after years of neglect and infrastructure sabotage. Periodic fuel shortages are common, with cars lining up at the pump sometimes for days, especially during the Christmas period.

President Muhammadu Buhari, whose popularity is already sagging, cannot afford to be seen by voters as unable to meet the needs of Nigeria’s 190million population.

It was not immediately clear what volume would be allocated to BP.

The NNPC already has 10 similar deals for a total of more than 300,000 barrels per day of crude out of its close to 1.9-million bpd production in October.

The NNPC imports about 70% of Nigeria’s fuel needs, mainly petrol, via swap contracts known as direct sale direct purchase. Foreign firms must pair up with a local company to deliver the products.

Under the model, the NNPC sells crude oil to refiners or trading houses, which, in return, supply mainly petrol, but also several other petroleum products such as diesel.

The NNPC said the arrangement with BP would account for 20% of the country’s total petrol needs. BP will partner with Nigerian firm AYM Shafa. BP was not originally among the companies with which the NNPC signed direct sale direct purchase agreements.