1. SELECTION OF BUYERS FOR STATE OWNED COMMODITY TRANSPARENCY
Mele Kyari
Group General Manager, Crude Oil Marketing Division

2. Sale of state owned commodity by SOE The NNPC Case: Agenda
Sale Options
Key considerations
NNPC Tender process
Risk of corruption
Pricing of Nigerian Crude Oil
Major outcome of reforms

3. Our Watchword….. No Room for corruption in operations
Transparency and accountability has become our watch word
Committed to improving reliability of supply

4. Competitive open tender Government to Government
Sale of state owned commodity by SOE The NNPC Case: Sale Options
Competitive open tender
Government to Government
SPV to finance projects
Production contract fiscal arrangement
Long term end user
Product supply arrangements

5. Sale of state owned commodity by SOE The NNPC Case: Key Considerations
Optimization of Pricing
Market driven
Transparent valuation
Formula based
Selection of Fit buyers
Financial and trading capacity
Advancement of local content
Elimination of patronage
Receipt of proceeds
Establishment of payment instruments
Validation of payments
Supply stability
Market perception
Direct access to end buyer

6. Sale of state owned commodity by SOE The NNPC Case: Optimization of Pricing
Market driven
Benchmark prices based on plats/argus… quotes
Formula based
Price= DBT +OSP
OSP based on formula
Pricing options determined 6 days ahead of loading dates and inplanted in LC
Valuation subject to GRC check and bank validation

7. Sale of state owned commodity by SOE The NNPC Case: Selection of Fit buyers
Financial and trading capacity
Ability to raise letters of credit
Access to market and partnerships
Capacity to manage lifting logistics
Advancement of local content
Inclusion agenda of Government supported by legislation
Elimination of patronage

8. To promote local capacity development
Objectives of Tender
To engage reputable qualified companies for the sale, purchase & lifting Nigerian crude grades.
To ensure selection off-takers is aligned with tested transparent and accountable procedures.
Compliance with the Public Procurement & Nigerian Content Acts
To promote local capacity development

9. Selection of Offtakers
Sale of state owned commodity by SOE The NNPC Case: Selection of Fit buyers
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Bid Evaluation
Selection of Offtakers
Contract Award
Successful companies sign a contract for a period of twelve calendar months
Bids evaluated against set criteria
Financial
Technical
Local content
Independent reports by NNPC evaluation team and Nigerian content board
List of applicants that meet specified conditions are forwarded to NNPC Top Management for review
NNPC places advert in the print media – Local & International
Bids received are opened at a public session.
Successful companies are advised through a formal letter from the Group General Manager, COMD
Presence of relevant stakeholders, including EITI.
NNPC management presents list of successful bidders for consideration and approval of the Minister of Petroleum

10. Sale of state owned commodity by SOE The NNPC Case: Risk of corruption1
Pricing of products and Crude Oil
Establishment of a determinate transparent pricing mechanism –OSP now computed on the basis of a template 2
Subsidy Schemes Execution
Withdrawal of subsidy & associated price balancing mechanisms – work in progress 3
Selection of Buyers of Crude Oil & Products
Open Market Tender with set criteria and basis of selection 4
Allocation of Available Oil
Established framework of allocating available crude oil 5
Payment for Off-take
Automation of payment system and appropriate security instrument.
Existing for oil & gas liquids and being delivered for products 6
Quality & Quantity Valuations
Engagement of world class quality & quantity assurance companies & automations

11. Sale of state owned commodity by SOE The NNPC Case: Key Outcomes of Reforms
Market stability associated with pricing reforms
Entry of Nigerian entities into Crude oil trading
Predictability of government revenue
Curtailment of inappropriate arbitrages
More room for reforms

12. Support for the Change Mantra of the
NNPC Resolve
Ensure Prompt & Hassle Free Operations
Enhancing Transparency and Accountability
Optimization of Federation Revenue
Key into anti-corruption fight of the Federal Government
Sale to capable Buyers
Support for the Change Mantra of the
Federal Government !

13. THANK YOU
THANK YOU

14. FRAUD
Caution on fraudster activities in crude oil and gas allocation is strongly advised
NNPC does not allocate or sell OFF OPEC quota
NNPC does not participate in joint crude oil and gas allocation with any Company
NNPC does not participate in spot allocation for now and is also not involved in cargo by cargo agreement
NNPC does not have any agent or intermediaries for Crude Oil and Gas sales or allocation. NNPC deals directly with only Offtakers that have successfully participated in the bid exercise

15. FRAUD
Caution on fraudster activities in crude oil and gas allocation is strongly advised
NNPC have been inundated with request to confirm documents for allocation of crude oil and gas
Almost all the documents presented to NNPC for confirmation are not genuine or issued by NNPC
People are therefore advised not to enter into any crude oil and gas sales agreement with any party on-behalf of NNPC
If in doubt, contact NNPC-COMD for any Sales of NNPC/Government crude oil and gas equity