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FG rolls over crude-for-products swap deals till December as under-recovery surges

…Seals $3bn fresh industry deal in Vienna

At a time under-recovery payments (subsidy) are rising on a daily basis, the Federal Government has extended its crude for oil products swap contracts by six months, meaning that deal stands till year end in December.

This was made public by the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr Maikanti Baru in an interview weekend.

The deal, popularly known as direct sale-direct purchase agreements (DSDP), were due to expire at the end of June.

Analysts say rising crude price remains a key challenge in distorting terms agreed in DSDP and the development has continued to pile pressure on the operational expenditure of NNPC in last couple of months crude oil price went up.

Besides, the Corporation has signed a $3 billion oil and gas development deal to ensure development in the sector at the just concluded OPEC meeting in Vienna.

Baru made this known at the ongoing 7th OPEC International Seminar in Vienna, Austria while speaking on investment in the Oil and Gas Industry.

He said that the deal was a third party financing deals with international banks adding that oil revenue remained vital for building the nation’s economy.

According to him, “The balance of objectives requires that we undertake a paradigm shift in our business model to ensure that we attract capital and sustain flow of investment.

“Much more, the recent fiscal challenge experienced by the nation places a burden for change; hence we have undertaken to broaden the base of investment sources outside traditional government funding.

“To encourage the existing players in the industry, particularly the traditional JV partners, we undertook to settle all outstanding cash call arrears amounting to 5 billion dollars.

“This has restored confidence in the Nigerian oil and gas industry.

“We have also signed third-party financing deals with international banks on new oil and gas development worth over 3 billion dollars.”

Baru said the NNPC had also executed a contractor financing deal of about $1 billion with Schlumberger for the development of 250 million barrels of oil equivalent fields in the Niger Delta.