DESPITE denials by officials of the Nigerian National Petroleum Corporation (NNPC), fresh facts have emerged to show that the nation’s crude oil is sold at ridiculously low prices for the purpose of corruptly enriching some NNPC officials. A letter from Calson (Bermuda) Limited to Vitol SA Geneva, both of which are joint venture operators of the NNPC, has revealed how NNPC connives with operators of some of its joint ventures to deprive Nigeria of revenue by allocating crude to joint ventures that sell below the premium price.

Although, Mr. Aminu Babakosa, Executive Director, Commercial and Investment at NNPC, recently, in Abuja, addressed a press conference and claimed that the nation’s crude oil was being sold at competitive prices, the letter has further shown that the crude oil allocated to Calson by NNPC is meant to be sold exclusively to VITOL at preposterously discounted prices, resulting in the country losing millions of dollars on a daily basis to some officials of NNPC, who serve on the boards of both Calson and VITOL.

The letter, dated March 24, 2010, and signed by Ms Aisha Mata Abdurrahaman, President, Calson (Bermuda) Limited, stated that the company would henceforth wish to trade its crude oil at competitive price in the open market as against selling only to VITOL.

The Calson letter, addressed to Mr. Paul Greenslade of Vitol Sa Geneva in Switzerland, read in part: “This is to notify you of our intention to trade our crude oil cargoes at competitive price in the open market, starting with May 2010 cargoes.”

The letter continued, “Please, note that Calson is willing to continue selling some of our cargoes to VITOL at competitive price.”   

The letter emphasised the fact that contrary to the claim of Babakosa, the crude oil allocated to Calson is sold below the international benchmark, resulting in colossal financial loss to the country and the equivalent as gain to some NNPC officials.

The letter by Abdurrahaman has generated a lot of furore at NNPC with the top shots threatening to remove her.

Their concern is that the letter is a challenge to the joint venture shareholders’ agreement between NNPC and VITOL for the Operation of Calson Bermuda Limited, as, according to Article 9.4 of the agreement, NNPC is to “supply a minimum of 30,000 B/D (barrels per day) to Calson for the duration of this agreement.”

Also, Article 9.5 of the agreement states that, “NNPC will secure the allocation to Calson of a minimum of 25,000 MT (metric tonne) per month of fuel for oil export. NNPC will make best efforts to ensure that Calson receives at least 30 per cent of all surplus products over and above the internal requirements of Nigeria. NNPC will supply to Calson 100 per cent of all export LPG from Port Harcourt refinery.”

Meanwhile, rather than the NNPC allowing Calson to trade the allocations in the open market, the company is mandated to sell  exclusively to VITOL of Geneva below the premium price.

The argument of the top brass of NNPC now is, “if Calson will no longer sell to VITOL at a discount, what is the rationale forthe continued supply of crude oil and petroleum products to Calson?”

Another term of the agreement is that “VITOL shall cause to be established and implemented, a training programme for Nigerian employees and/or nominees of NNPC for the purpose of transfer of relevant know-how in the international trading activities contemplated under this guarantee.”

However, 22 years after its establishment, NNPC has not been able to develop its human skills in the area of international oil trading as its secondees have been restricted to only financial treasury, office administration and local Nigerian logistics functions. Currently, the Nigerian content in Calson (Bermuda) Ltd is about 3 per cent in its core international oil trading activities.

When contacted, the Executive Director (Commercial and Investment) of NNPC, who is directly in charge of crude oil sales and lifting, Alhaji Baba-Kuwa, requested that our correspondent should come down to his office in Abuja for him to know the modalities and conditions attached to crude oil shares in the current dispensation.

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