The Nigerian National Petroleum Company Limited (NNPC Ltd) announced on Monday that it has commenced the shipment of Liquefied Natural Gas (LNG) cargoes to Japan and China under the Delivered Ex-Ship (DES) terms. This milestone marks a significant advancement in NNPC’s international trading operations.
Delivered Ex-Ship (DES) is an international commercial term where the seller is responsible for delivering the goods to a specified port, including taking on the shipping and insurance costs until the products reach the port of delivery. This method requires a higher level of expertise and efficiency compared to the Free on Board (FOB) system, where the buyer assumes responsibility once the goods are on board the ship.
According to a statement by NNPC’s Chief Corporate Communications Officer, Olufemi Soneye, the company achieved this through the collaborative efforts of its subsidiaries, NNPC LNG Ltd and NNPC Shipping Ltd. The first DES LNG cargo was delivered from the 174,000m³ LNG vessel *Grazyna Gesicka* to Futtsu, Japan, on June 27, 2024. NNPC has since expanded its operations to China with the delivery of another LNG cargo under the DES terms.
Soneye noted that NNPC has been involved in LNG trading since 2021, with its first LNG cargo sale taking place in November of that year. Since then, the company has traded over 20 cargoes into European and Asian markets on an FOB basis. However, the transition to DES is seen as a more financially rewarding system that enhances NNPC’s involvement in the downstream segment of the LNG sector, allowing the company to capture more market share and build in-house capacity.
“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,” said Dapo Segun, Executive President of NNPC Downstream.
The collaboration between NNPC LNG Ltd and NNPC Shipping Ltd in executing these DES LNG shipments has further solidified NNPC Shipping’s reputation as a world-class provider in the LNG sector. Managing Director of NNPC Shipping, Panos Gliatis, expressed the company’s ambition to build a robust shipping portfolio, including owning vessels, to offer greater flexibility and service to its sister companies and other clients.
Looking ahead, NNPC LNG Ltd and NNPC Shipping Ltd are scheduled to deliver at least two more LNG cargoes to the Asian market on a DES basis by November, with expectations of more orders before the end of the year.
