How Ex-Petroleum Minister, Diezani Blocked Long-Term $15bn Annual Oil Deal with India

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The Indian High Commissioner to Nigeria, Ajjampur R. Ghanashyam in an interaction with journalists at the weekend revealed how former Minister of Petroleum Resources, Mrs Diezani Allison Madueke, failed to sign a long-term agreement with his country, Nigeria’s number one oil buyer.He said Diezani used intermediaries, who collected $14 billion annual deal.
The envoy at the weekend told journalist that Nigeria was the only country which used intermediaries in its oil deals with India.

He said: “From other countries, when we buy oil, whatever we want to pay, we pay to the Ministry of Finance of that country. In Nigeria, we pay to intermediaries. We would like to be dealing directly with the Nigeria National Petroleum Corporation (NNPC). It’s not a good thing. Why should we go through intermediaries?

“Secondly, we would also like to have long term agreement, which we have with many countries: Iran, Iraq, Saudi Arabia, and other countries from where we buy oil. Nigeria is the only country with whom we don’t have an agreement. When we write a letter to NNPC, we don’t get a response.”

The NNPC 2014 Annual Statistical Bulletin indicated that India bought 136,419,844 barrels of crude oil.
Ghanashyam added that apart from the lack of long-term agreement between the two countries on crude oil purchases, in 2006, an Indian company, Oil & Natural Gas Commission Videsh Limited (OVL) and Mittal Energy International, which is a joint venture between OVL, an Indian government company, and Mittal Energy a private firm, applied for oil concession.

He said the Signature bonus sum of $25 million was paid, but neither was the oil concession granted nor the money paid returned to the Indian companies.

“How many years is it? Nine years. Even to get the concession is not possible, and the money is not refunded to us. For nine years your country has been sitting on this, and they make us go round and round and round.

“We buy $15 billion worth of crude oil per year and we have the potential of importing $50 billion worth of crude oil from Nigeria. We can buy more because our requirement is going up.

“But if you continue to make us to pay through agents, and continue to ask us to buy from the swap market, it means you don’t trust us, and if you don’t trust us, we have to look for those who trust us more.

“We are making concessions to Nigeria by buying your crude oil because you’re our old friends and we’ve been friends for a long time, and your crude oil is better quality. But you must take our interest into account.”

Ghanashyam said India’s trade with UAE may not threaten India’s oil import from Nigeria but that there were other overtures from oil producing states.

According to him, “Today, oil is the buyers’ market, not the sellers’ market. You can’t sit on your high horse and dictate to the buyer. From Iran we used to buy 11 million metric tonnes. They want us to raise it to 22 million metric tonnes because the sanction is being lifted.

“They want to come back in full force. The last time our prime minister went to Iran, they said they wanted to invest between $8 billion and $10 billion in India. Saudi Arabia has offered to use their own oil fleet to supply crude oil to India.

That means we get transportation at Saudi’s cost, that is a difference of 50 cents per barrel. Countries are trying to woo India because we are the third largest consumer of oil in the world, after the United States and China; and we need more. Every year we need between $6 billion and $8 billion additional worth of crude oil. We will go everywhere to buy crude oil.”

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