UPDATE 1-Nigerian state oil company ends delivery and offshore processing deals

Wed Aug 26, 2015 2:06pm EDT
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ABUJA Aug 26 (Reuters) - Nigeria's state oil company has cancelled its contract for the delivery of crude to the country's refineries in Warri, Port Harcourt and Kaduna, it said on Wednesday.

Oil sales account for about 70 percent of government revenue in Nigeria, Africa's top crude producer, but the country imports most of the fuel used by its 170 million inhabitants because of its inefficient, ageing refineries.

"The corporation has cancelled the current contract due to exorbitant cost and inappropriate process of engagement," a Nigerian National Petroleum Corp (NNPC) statement said, adding that the aim is to cut costs and improve efficiency.

Overhauling the energy sector in Africa's biggest economy has been a priority of President Muhammadu Buhari, who was inaugurated on May 29 after being elected largely on his pledge to fight corruption.

NNPC also announced the termination of the offshore processing agreements made in January with Duke Oil Company, Aiteo Energy Resources and Sahara Energy Resources, saying that it believed the agreements were skewed in favour of the companies.

The statement added that a number of mostly local companies have been approached to bid for new OPA deals, including Oando , Sahara Energy, Calson, MRS, Duke Oil, BP/Nigermed and Total Trading.

NNPC's moves come a day after President Buhari approved cancellation of crude oil swap deals for refined products between NNPC and oil traders. (Reporting by Camillus Eboh; Writing by Alexis Akwagyiram; Editing by David Goodman)