The Nigerian National Petroleum Company Limited (NNPC Ltd) has made a significant stride in its global energy supply operations by commencing Liquefied Natural Gas (LNG) shipments to Japan and China on a Delivered Ex-Ship (DES) basis. This move aligns with the company’s strategic vision to become a dynamic and reliable global energy supplier of choice, according to a statement by Chief Corporate Communications Officer, NNPC Ltd, Olufemi O. Soneye.
The milestone was achieved through the collaborative efforts of two NNPC Ltd downstream subsidiaries: NNPC LNG Ltd and NNPC Shipping Ltd. The first DES LNG cargo was delivered by the 174,000m³ LNG vessel Grazyna Gesicka at Futtsu, Japan, on June 27, 2024. Following this initial success, the company has expanded its operations to include China, where it has already delivered one LNG cargo on a DES basis.
This development marks a significant shift in NNPC Ltd’s LNG trading strategy. The company has been involved in LNG trading since 2021, initially operating on a Free on Board (FOB) basis. The transition to DES deliveries represents a higher level of operational complexity and financial reward, as it requires the seller to take responsibility for shipping and insurance until the goods reach the specified port of delivery.
Delivered Ex-Ship (DES) is an international commercial term that requires the seller to deliver the products/goods at a specific port. The seller takes responsibility for the shipping and insurance for the products/goods until they get to the specified port of delivery. It requires expertise and a higher level of efficiency to execute than the Free on Board (FOB) system.
NNPC Ltd has been involved in LNG trading since 2021 with its first LNG cargo sale in November of that year. It has since traded over 20 cargoes into the European and Asian markets on FOB basis.
Speaking on the development, the Executive President, Downstream, Mr. Dapo Segun, said: “The DES system, apart from being more financially rewarding, allows NNPC Ltd inroads into the downstream segment of the LNG sector and positions it to capture more market shares while building in-house capacity and ensuring that global customers are familiar with the NNPC Ltd brand”.
The collaboration between NNPC LNG Ltd and NNPC Shipping Ltd in executing the LNG supplies on DES basis has strengthened the latter’s position as a world class shipping provider in the LNG sector.
“NNPC Shipping intends to build a shipping portfolio (including owned vessels) so that we can provide our sister company and other clients all the shipping flexibilities they need”, Managing Director of NNPC Shipping, Panos Gliatis, enthused.
NNPC LNG Ltd, in collaboration with NNPC Shipping Ltd, is scheduled to deliver at least two more LNG cargoes to the Asian market on DES basis by November. Many more orders are expected before the end of year.