- July 1, 2021
- Posted by: Manuels Effe
- Categories: covid-19 Updates, Insight
Duke Oil, a subsidiary of the Nigerian National Petroleum Corporation (NNPC), has reached a 30,000-barrel per day crude oil supply deal with the Indonesian state oil corporation, Pertamina, and Indian Oil Corporation.
The move, which signals the nation’s attempt to capture some market share in Asian countries, is said to hold the potential of strengthening the country’s revenue outlook at a time its oil industry is faced with grim volatility and uncertainty.
The Managing Director (MD) of the NNPC Trading Company Limited, Lawal Sade, who made this known in the latest edition of NNPC’s Quarterly Magazine, said Duke Oil has diversified its trading portfolio and adopted alternative trading strategies to increase its volumes and profitability, stating that its recent crude supply agreement with the Indonesia State oil corporation, may push the company’s 2021 trading year profit to about $70million.
According to the MD, Duke Oil has also concluded plans to take part in upstream third-party financing for direct access to Nigeria’s equity crude oil, just as it plans to secure 120,000MT of storage and blending facilities offshore.
Added to that, Sade said the company would equally expand into bitumen and base oil importation in the 2021 trading year, pointing out that the move has already seen its gross revenue growing to N28 billion as against the projected N16 billion in the budget.
Notwithstanding the COVID-19 pandemic last year, he continued, the development led to an additional N12 billion income for the company.
“Further from the impacts of COVID-19 and the thinking-out-of-the-box my 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, we are setting our eyes on leveraging the inroads made in the Asian and Middle East market for the sale of Nigeria’s crude oil grades.
“We are thus poised to secure term contracts for the supply of 30,000bpd of oil to Indonesia’s Pertamina, partake in India state-owned refineries crude oil purchase tender and develop counterparty business relationship with other Middle Eastern state-owned oil enterprises,” Sade said, stressing 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 hopes to undertake active participation in the derivatives markets by registration and engagement with major trading houses while commencing derivative trading to manage price risks.
“Ultimately, in 2021, NNPC Trading Management is geared towards the activation of a robust business plan & automation and organizational structure to support the business expansion activities through,” Sade further said in the publication, adding that Duke Oil, on cost containment plan, would cut demurrage cost by 25 percent through proper planning and scheduling of shipments with optimal operational efficiencies in alignment with relevant stakeholders, in the same way, it intends to cut administrative expenses by 15 percent through contract renegotiation strategy and online meetings.