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Published On: Wed, Feb 26th, 2014

NNPC denies selling $6.8bn crude oil below market value

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NNPC Group Managing Director Andrew YakubuNigerian National Petroleum Corporation (NNPC), has rejected claims by the Barnes Declaration that the corporation in collaboration with Swiss Oil Trading Companies, dispose crude at prices lower than market value.

Group Managing Director of the corporation Andrew Yakubu yesterday at the House of Representatives investigative hearing on the alleged connivance of NNPC with the Swiss oil dealers to rob Nigerian billions of dollars denied the allegation saying the price strategy of the NNPC is aligned to international best practices in the industry.

“Our prices are based on a reference to the benchmark crude Brent whose prices are published by platts for the international trading community, a premium/differential for individual crude grades and the selection of an option. With average of five consecutive day publication which provides about 97% of the value of any of our crude blends while differential/premium account for about 3% of the total value”.

According to him, “we see no remote possibility of the loss of USD6.8billion from sales below market value to the companies described by the petitioners as Swiss Trading Company”.

He also debunked claims that the Swiss Company, Vitol Trafigura accounts for 36% of the total volume disposed by the corporation. “By our records, Vitol Trafigura accounts for 30.7 million barrels out of the total 341.07 million barrels disposed by the corporation in 2013 lifting”.

“The lifting of Trafigura and Vitol in 2013 represents 9% of the total lifting as against 35% reported by the Barnes Declaration. The traders collectively account for 98.2million barrels during the same period.

The other international traders including the Swiss Trading Company account for 61.2million barrels while off-shore and the Nigerian refineries took 36.2 and 38.3million barrel respectively”, he said.

The Barnes Declaration had earlier came up with a report alleging that 100% of Nigeria crude are disposed through private trading company rather than the corporation selling directly to the market with attendant loss trading margins.

Earlier in his address, Chairman of the House Committee on Petroleum Upstream, Rep. Muraina Ajibola (PDP Oyo), said the exercise is a core function of the parliament and is not meant to witch hunt anyone.

He stressed that given the strategic role, revenue from oil plays in our national economy, the committee will undertake the investigation with every sense of seriousness in order to make appropriate recommendations to the House.

He assured that the committee would conduct its assignment with an open mind, and called on the stake holders to cooperate fully with the Committee.

In his remark, Speaker of the House of Representatives, Aminu Waziri Tambuwal, represented by Rep. Ali Ahmad urged the committee to proceed with open mind but also be prepared for the challenges that they may face especially as information on operations in the oil and gas are not usually available.

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