• Over $70m Profit forecast in 2021
Duke Oil, the oil trading entity of NNPC Trading Company Limited is desirous to close out a 30,000 barrel per day crude oil supply deal with Indonesia’s state oil corp, Pertamina and Indian Oil Corporation.
The deal according to the company will strengthen its recent inroads into the Asian market; it will also contribute to its planned profit forecast of $70 million in the 2021 trading year.
Details of the company’s activities for the year and progress made for its future growth plan leveraging on the Transparency Accountability and Performance Excellence (TAPE) principle of the NNPC management were obtained it the latest edition of NNPC, A Quarterly Magazine of the Nigerian National Petroleum Corporation.
Mr. Lawal Sade, Managing Director of NNPC Trading Company Limited told the publication that its oil trading entity, Duke Oil, has diversified its trading portfolio and adopted alternative trading strategies to increase its volumes and profitability.
This, he noted resulted in a gross revenue of N28 billion against a budgeted figure of N16 billion, thus earning the subsidiary an additional N12 billion in income in year 2020 despite the Covid-19 pandemic.
Sade also explained that the results were supported by credit lines which were secured from local and international banks, and which facilitated issuance of Letters of Credit to cover products importation and boost the company’s credibility and reputational rating.
“Further from the impacts of COVID-19 and the thinking-out-of-the-box his management adopted, the company made remarkable inroads into the Asian market as a secured off taker of Nigeria’s crude. From this, supply deals were hammered out with refiners in India amongst others,” said the publication.
“Based on this performance, Duke Oil has set its eyes on leveraging the inroads made in the Asian and Middle East market for sale of Nigeria’s crude oil grades.
“It is thus poised to secure term contracts for the supply of 30,000bpd of oil to Indonesia’s Pertamina, partake in Indian state-owned refineries crude oil purchase tender and develop counter party business relationship with other Middle Eastern state-owned oil enterprises,” it was revealed.
Further, the subsidiary, the Magazine stated will participate in upstream third-party financing for direct access to Nigeria’s equity crude oil as well as securing 120,000MT of storage and blending facilities offshore.
It will also expand into bitumen and base oil importation in the 2021 trading year.
From these, the publication noted that, “the company’s profit forecast for 2021 was aggressively projected at over $70 million.”
Within the next 12 months, it explained Duke Oil will focus on growing crude oil and petroleum products trading activities by expanding its importation and sale of crude oil and petroleum products offshore and developing a trading hub offshore Lagos amongst others.
“The company also hope to undertake active participation in derivative markets, by registration and engagement with major trading houses while commencing derivatives trading to manage price risks.
“Ultimately, in 2021, NNPC Trading Management is geared towards activation of a robust business plan & automation and organizational structure to support the business expansion activities through,” the publication stated.
On the cost containment plan, it added that Duke Oil intends to cut demurrage cost by 25 per cent through proper planning and scheduling of shipments with optimal operational efficiencies in alignment with relevant stakeholders.
The company, the NNPC Magazine noted also intends to cut administrative expenses by 15 per cent through contract renegotiation strategy and online meetings.
“NNPC Trading is also seeking to reduce penalties associated with late payment of Letters of Credit, insurance by 50 per cent by ensuring proper fund management including availability of FOREX, negotiation strategy and timely payments of invoices,” the publication explained.