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What Is a Crude Oil Lifting Agreement

Nigeria does not import crude oil or gas, as demand for both is met by domestic production. However, Nigeria imports refined petroleum products from kerosene, diesel and high-end motor gasoline (PMS) because the country does not have sufficient refining capacity to meet its fuel needs. According to the NNPC, Nigeria has estimated its oil reserves at 28.2 billion barrels of crude oil and 165 trillion standard cubic feet (scf) of gas (including 75.4 trillion cubic feet of unassociated gas). In addition, the average production capacity is 2 million barrels of crude oil per day (bpd) and 7.6 billion cubic feet of gas per day[1]. Under an AER, crude oil is allocated to a trader, and the trader is then responsible for importing certain products of a value equal to that of crude oil, less certain agreed fees and expenses, the value of which is retained by the trader. By early 2011, the government, represented by NNPC subsidiaries (Duke Oil and PPMC), had signed four EPRs with commodity traders. Between 2010 and 2015, the business model for crude oil trading was based on controversial oil-for-product trading until the NNPC signed its first set of contracts for the direct sale of crude oil and the direct purchase of products (DSDP) worth up to 330,000 barrels of oil per day (b/d) in 2016[2]. He pointed out that the company offers not only drilling and unloading know-how, but also refineries. Therefore, «it would be wise for ExxonMobil to take that first elevator, which it will then process in its refineries so that the quality of crude oil or the integrity of crude oil can be maintained in the future.» «My understanding is that the first elevator often arrives with a lot of contaminants.

Impurities in your crude oil can affect the price of that crude oil, which would affect not only that batch, but also subsequent batches. The Petroleum Industry Governance Bill (IGBP), adopted by the upper houses of the National Assembly on 25 May 2017, clearly highlights the need for transparency as a fundamental element in promoting institutional, regulatory and commercial reforms of the oil industry. There is a broad consensus that the commercial activities of the Nigerian oil industry need to be more transparent and accountable in order to accelerate reform efforts to diversify the economy and promote industrial growth. To this end, a number of approaches have been proposed to increase the transparency of crude oil trade agreements, in particular with the DSDP model currently used by the NNPC. Oil for swaps comes from the 445,000 barrels per day of the NNCC Domestic Crude Allocation (DCA). The TCA provides the total amount of crude oil generally available for trading under the various contract models that the NNPC has used over the years. The usual contractual models are the Refined Products Exchange Agreement (EPRA) and the Offshore Processing Agreement (OPA). M. Bynoe explained that «the CTC has established a mechanism for the timing of gross load statements based on volume requests calculated taking into account the cost recovery rules of the oil deal.» This, he said, establishes a strict policy for the deal, suggesting that possible delays could lead to a loss of value and stop production on the floating vessel, storage, production and unloading. It was noted that the Department works with its sister agencies to ensure effective and efficient operation. According to the NNPC, Nigeria estimates its oil reserves at 28.2 billion barrels of crude oil and 165 trillion feet of a thousand standard cabins (including 75.4 trillion of uncompleted gas). In addition, the average production capacity is 2 million barrels of crude oil per day (bpd) and $7.6 billion per day of gas.

In this type of transaction, the entrepreneur, whether it is a refinery or a trading company, would have to increase a certain amount of crude oil, refine it abroad and return the resulting products to the NNPC. Contracts set out the expected returns on the products (i.e., quantities of diesel, kerosene, gasoline, etc.) that the refinery will produce. The refining company can also pay the NNPC in cash for any products that Nigeria does not need. In 2008, as fuel shortages worsened, NNPC made a takeover bid at the end of 2009 and signed one with BP subsidiary Nigermed. The following year, PPMC signed another takeover bid with Ivorian refiner Ivorian Refining Company (SIR). This year (2017), out of a total of 224 bids from companies that wanted to purchase and source Nigerian crude oil for the 2017-2018 period, 39 were winners, with the NNPC noting that when implementing pre-invitation offers and selecting buyers after the controversy that followed the process, due diligence and compliance have been met. Oil-for-product exchanges are the crude oil exchange agreements with the equivalent of refined products such as kerosene, premium motor gasoline (PMS) and diesel used by NNPC in its crude oil trading operations. The 2016 DSDP contract replaced the Offshore Processing Agreement (OPA), which provided the business model for previous oil-for-product exchanges in Nigeria. This report will briefly focus on the business and contractual models used by the NNPC in crude oil trade agreements to suggest ways to improve the trading framework to ensure fair business for Nigeria.

In this type of business, the entrepreneur, whether it is a refinery or a trading company, is required to raise a certain amount of crude oil, refine it abroad and return the resulting products to the NNPC. Contracts specify the expected product yields (i.e., the respective quantities of diesel, kerosene, gasoline, etc.) that the refinery will produce. The refining company can also pay the NNPC in cash for any products that Nigeria does not need. In 2008, as fuel shortages worsened, NNPC issued a tender for a takeover bid and signed one with BP subsidiary Nigermed in late 2009. The following year, PPMC signed another takeover bid with the Ivorian public refiner Société Ivoirienne de Raffinage (SIR). The Petroleum Industry Governance Bill (PIGB), adopted by the upper houses of the National Assembly on 25 May 2017, clearly underlines the imperative of transparency as a fundamental element of institutional, regulatory and commercial reforms in the oil industry. There is a broad consensus that the commercial activities of the Nigerian oil industry need to be more transparent and accountable in order to accelerate reform efforts to diversify the economy and promote industrial growth. To this end, a number of approaches have been proposed to create more transparency in crude oil trade agreements, particularly with the DSDP model currently used by the NNPC. Oil for swaps comes from the NNPC`s 445,000 barrels per day of domestic crude allocation (DCA). The TCA provides the full amount of crude oil generally available for trading under the various contract models used by the NNPC over the years. The usual contractual models are the Refined Products Exchange Agreement (EPRA) and the Offshore Processing Agreement (OPA). This year (2017), out of a total of 224 bids from companies purchasing and producing Nigerian crude oil for the period 2017-2018, 39 companies emerged as winners, with the NNPC stating that by conducting the pre-bidding and pre-selecting the buyer after the controversy that followed the process, due diligence and regulatory compliance were followed[4] «My understanding is as follows: that the first elevator often arrives with a lot of impurities.

Impurities in your crude oil can affect the price of that crude oil, which would affect not only that batch, but also subsequent batches. «This is an industry standard document or template used on the basis of the International Agreement on the Lifting of Crude Oil by oil negotiators. It will be applied and adapted to take into account the context of Guyana,» he explained. Personal safety equipment: safety helmet, back support (for lifting heavy loads), glasses, full face shield, safety jackets, work gloves, rubber gloves up to the elbows, steel and/or rubber boots, respirators (APR), environmental protection, isopropyl alcohol and hearing protection. With the first oil expected in a few weeks, the agreement to increase crude oil has «evolved significantly and will be completed». M. Bynoe explained that «the CTC has established a mechanism for the timing of gross load statements based on volume requests calculated taking into account the cost recovery rules of the oil deal.» This, he said, establishes a strict policy for the deal, suggesting that possible delays could lead to depreciation and stop production on the floating vessel, storage, production and unloading. .

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