Nigeria: Oil sales vs market price

The Nigerian government collects a significant share of oil and gas revenue in-kind, receiving physical barrels of oil that the national oil company, NNPC, markets and sells on the government’s behalf. While past allegations have pointed to oil being sold below market prices to politically exposed traders, further analysis is needed to understand the factors influencing price deviations.

Price variations in oil sales

The EITI’s analysis of NNPC’s oil sales reveals significant differences in the discount and premium on Brent oil prices across sales. The data shows no consistent patterns in how these deviations occur across different buyers, contracts or time periods. Nonetheless, these differences highlight the need for further scrutiny and robust data to ensure accountability in Nigeria’s oil marketing practices.

A plausible explanation could be that favourable terms are given to certain buyers or politically exposed traders. This raises questions about pricing mechanisms and governance, but more evidence would be required to link these variations directly to the identity of buyers or beneficiaries or whether other factors are at play such as the type of contract, other market conditions or disruptions. EITI data on beneficial owners of traders could help give a more comprehensive picture and a fuller understanding behind the differences that were identified.

This analysis is based on data from the NNPC website: www.nnpcgroup.com/insights/nnpc-limited-disclosures.