Nigeria Expands Crude Swap Initiative to Cut Local Refining Costs

The Nigerian government is expanding its crude swap initiative to reduce local petroleum refining costs.

The plan, which includes a regulator-mandated netting mechanism, will allow refiners to cut down on refining costs by eliminating long-haul marine shuttling, vessel chartering, and offshore ship-to-ship transfer fees.

Temitope Kolade, an associate director at Andersen in Nigeria, said the arrangement has the potential for reducing these costs, which can account for up to 80% of a refinery's operating costs.

The gas element of the proposed system is also designed to address the flaw in the Petroleum Industry Act (PIA), which mandates gas producers to allocate a particular quota of natural gas to the Nigerian market before export but did not consider delivery gaps.