The Nigerian National Petroleum Company Limited (NNPC) has expanded its global footprint by delivering liquefied natural gas (LNG) cargoes to Japan and China. This significant move into new markets was achieved using the Delivered Ex-Ship (DES) basis, a method that places more responsibility on the seller but can offer greater financial rewards. NNPC’s chief corporate communications officer, Olufemi Soneye, announced the milestone in a statement shared on the company’s X platform.
NNPC reached this milestone through the collaboration of its two subsidiaries, NNPC LNG Ltd. and NNPC Shipping Ltd. They worked together to deliver the first LNG cargo to Futtsu, Japan, on June 27, 2024. The shipment used the 174,000-cubic-meter vessel Grazyna Gesicka. Following this success, NNPC expanded its operations to China, delivering another LNG cargo under the same DES arrangement. This expansion marks a significant step for NNPC, signaling its ambitions to increase its presence in the Asian market and beyond.
The DES system is different from the Free on Board (FOB) system that NNPC previously used. Under the DES system, the seller takes on more responsibility for the shipment until it arrives at the buyer’s destination. This includes the costs of shipping and insurance, making it more complex but potentially more profitable. The DES model allows NNPC to better control the supply chain and potentially capture more value from each sale. This approach aligns with NNPC’s broader strategy to strengthen its market position and build brand recognition on a global scale.
Since entering the LNG market in 2021, NNPC has sold over 20 LNG cargoes, primarily to European and Asian markets, using the FOB system. However, the move to DES shipments represents a strategic shift aimed at maximizing returns and expanding market share. Dapo Segun, NNPC’s executive vice president for downstream operations, emphasized the importance of this development, noting that the DES system offers better financial returns and positions NNPC to capture a larger share of the global LNG market. “The DES system is more financially rewarding and positions NNPC to capture more market share while building capacity and ensuring our global customers are familiar with the NNPC brand,” Segun said.
The partnership between NNPC LNG Ltd. and NNPC Shipping Ltd. has been crucial in executing these LNG deliveries on a DES basis. This collaboration not only enhances NNPC’s ability to reach new markets but also strengthens its reputation as a world-class shipping provider in the LNG sector. NNPC Shipping Ltd. has taken significant steps to build its capabilities, including plans to expand its shipping portfolio, which may involve acquiring new vessels. Panos Gliatis, managing director of NNPC Shipping, expressed confidence in the company’s future growth. “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,” Gliatis stated.
