The nation's largest refiner, IOC buys some 8 million tons a year of crude oil from Nigeria. Most of it is bought from spot or current markets where prices are subject to extreme volatilities.

A term contract offers not just assured supplies but also cheaper price as the rate is based on official selling price of exporting country.

IOC is the only Asian companies to have been offered a term contract by the new government in Nigeria which last month overhauled oil contracts, choosing to sell directly to international refineries, trading houses and local downstream firms.

For 2016, Nigeria signed term contracts for 991,000 barrels per day of oil or half of its around 2 million bpd of production.

IOC was among the firms chosen for the contract alongside refiners like Spain's Cepsa, Italy's Saras, and ENOC of the United Arab Emirates.

On the list were also trading houses Trafigura, Mercuria and Vitol and international oil companies ENI, Total, Exxon and Shell.

IOC Chairman B Ashok said Nigeria choose the companies from their track records and trading experience to ensure that its crude cargoes are not left unsold.

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