March 30, 2011 / 6:55 AM / 9 years ago

Nigeria awards $30bln in oil supply deals

LONDON (Reuters) - Top African oil producer Nigeria has awarded 2011 supply contracts worth around $30 billion, with trading companies Vitol, Trafigura and Glencore landing some of the biggest contracts, a document showed.

The Nigerian National Petroleum Corporation (NNPC) has awarded term contracts for around 1.5 million barrels per day (bpd) from its share of the country’s oil production.

Based on the current price of Brent crude oil, the total supply deals are worth around $172 million a day or $32 billion for the June-December period, when trade sources said the contracts would be valid.

Given crude supply disruptions from Libya, relatively stable Nigerian oil output since a 2009 amnesty has increased the appeal of the west African country’s light, sweet oil and competition for contracts is fierce, trade sources said.

Strong demand has pushed cash prices of the benchmark Nigerian grade Qua Iboe to more than two-year highs this month, making it among the most expensive oil in the world.

“There were lots of arguments and infighting and trips out to Nigeria to arrange this,” said an oil trader working for a company appearing on this year’s list.

Trading firms Vitol, Trafigura and Glencore each won the biggest contract awarded for 60,000 bpd of crude oil.

This amounts to two crude oil cargoes a month.

Nigeria’s production has been steady at around 2.6 million bpd over the past year, the energy advisor to the current president said this month.

NEW ENTRANTS

Many African trading companies such as Delaney, Masters E. and Elanoil appeared on the 2011 list that were not previously term buyers, trade sources said.

But larger international trading firms to increase their allocations by buying out contracts given to smaller, African companies, they added.

“It used to be just the bigger firms that got the contracts but the indigenous list is rising. The big firms will be going around and trying to buy from the smaller ones,” said a west African crude oil trader.

Some thought that the Nigerian election could result in further contract revisions.

“The people in power can do what they want in terms of allocations. There is room for change,” said a second crude oil trader.

Italian refiner ERG was awarded a contract to sell 30,000 bpd in a move that market participants saw as likely driven by the firm’s need to replace lost Libyan barrels.

The firm was previously only a sporadic buyer of west African oil, a trader said.

Brazil’s Petrobras and Azeri oil firm SOCAR were also new term suppliers from Nigeria, the document showed.

The Ivory Coast did not appear among this year’s list of buyers, in a change from 2010.

The country’s 80,000 bpd SIR refinery may be forced to shut from the middle of next month unless it gets fresh supplies of crude oil, the refinery’s managing director said this week, because of difficulties paying for crude.

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