Oil marketers who paid a courtesy visit to President Bola Ahmed Tinubu have promised to donate 100 mass transit buses that will run on Compressed Natural Gas (CNG) to the government as part of the palliatives to mitigate the effects of the removal of fuel subsidy. The cost of the buses is put at N10 billion.
This is just as President Tinubu himself has directed the National Economic Council (NEC) led by Vice President Kashim Shettima to devise an approach and begin the process of working on interventions to mitigate the impact of subsidy removal on the Nigerians.
Governor Dapo Abiodun of Ogun State who led a group of marketers on a courtesy visit to the President disclosed this after their meeting at the villa.
According to Governor Abiodun: “The group of marketers subsequently announced their intention to donate to 50 to 100, fifty-seater mass transit buses that would run on CNG, costing a N100m each and N10bn cumulatively, to cushion the effects of the removal within the next 30 days.”
He stated that he hopes other bodies can emulate what the marketers have done.
The governor who was a former chairman of one of the oil marketers association, while addressing the press stated that the marketers expressed solidarity with the President for removing the N4trn subsidy burden, a move that can enhance the Federation Account Allocation Committee (FAAC) allocation to states.
The President’s parley with the oil marketers comes amid the controversy and protests trailing the removal of subsidy on Premium Motor Spirit known as petrol.
FIPL optimizes local capacity for enhanced power generation
First Independent Power Limited (FIPL), a Sahara Group Company has restated its commitment to increasing power generation and sustainability impact in the sector through robust local capacity optimization.
Speaking at the Nigerian Content Conference organized by the Nigerian Society of Engineers in Port Harcourt, Rivers State, Chief Executive Officer, FIPL, Dr. Kenechukwu Nwangwu said retooling and investing in shoring up local capacity has the potential of transforming the power sector.
Nwangwu lauded the NSE Port Harcourt branch for assembling prominent industry leaders and professionals to discuss the impact of the Nigerian Content Act 2010 – 2020 on the Oil & Gas Sector and the Power Industry.
In his keynote address, Nwangwu said strengthening local content in the power sector would promote job creation, funds retention, and the development of skills and competencies of Nigerians.
According to him, the Act symbolizes the intention of the nation towards growing local capacity. He urged all stakeholders to explore all possibilities, “holistically and transparently”.
He said, “It is a laudable thing for us to deliberate on the impact of the local content Act in the power sector at this forum. A robust local content in the power sector will lead to job creation, funds retention, and domiciliation of the operations of foreign companies in Nigeria while enabling the development of skills and competencies of Nigerians.”
He called on regulators to drive compliance, stating, “We already have a formidable regulation in the sector, all we need now is implementation across the value chain, in strict compliance with the provisions of the law.”
Nwangwu said FIPL remained a frontline promoter of local content in Nigeria, adding that FIPL continues to “bring energy to life responsibly to over 6 million lives with the collaboration and support of community stakeholders, suppliers, artisans, health and safety workers who we support with training, sustainable impact projects and capacity building opportunities.”
Petrol to sell between N478 and N600/ltr as subsidy goes
At the current petrol pricing template, the pump price of petrol will sell anywhere between N478 and N590 per litre, based on the effective dollar rate the Central Bank of Nigeria (CBN) settles upon following the directive by the new president to reform currency rates.
The Nigerian National Petroleum Company Limited met with oil marketers to agree on indicative pricing. Mele Kyari, its group chief executive officer, met President Bola Tinubu at the Presidential Villa shortly after he resumed work. The results of these engagements have yet to be made public.
Using the CBN naira-dollar rate of N467/$1, the pump price of petrol could rise to N390 per litre if the government no longer pays subsidy. When the rate allowed for airlines to repatriate funds, which stand at N600/$1, is used, calculations show that the effective pump price would be N478 per litre in Lagos.
At the black-market rate of N750/$, the picture changes. The product cost rises to N503.91 per litre. Other costs including traders’ margin, freight, NPA port charges, NIMASA, financing costs, jetty storage, and wholesale margin bring the landing cost to N565.34.
When retailers’ margin, dealers’ margin and transport cost are added, it brings the price in Lagos to N590.34. The price could average around N600 when it is transported across Nigeria.
The major components that constitute petrol landing cost in Nigeria include product cost, traders and insurance margin, shipping, charges by government agencies, financing and banking charges and storage charges. These come to about N358.24 per litre as landing charges. Another N25 is added based on retailer margins (N15), dealer’s margin (N5) and Transport cost at (N5). This brings the total costs to N383.24.
Daily petrol sale falling in Lagos after subsidy removal
The volume of average daily sale at petrol stations across Lagos is dropping as Nigerians buy less fuel than they bought before last week’s price adjustment. Visits to more than 10 large petrol stations in Lagos show that sales are down by as much as 25 per cent at some stations with three recording more than 32% drop in daily sales over the last one week.
Petrol prices went up in Nigeria by almost three times after the government stopped the controversial subsidy on petrol. Before the subsidy removal it was said by the government that Nigerians consumed as much as 62 million litres of petrol daily although that figure was always thought to be inflated.
In a tweet, leading activist and founder of ANAP foundation Atedeo Peterside said “let us watch NNPC limited daily consumption figures collapse as the component parts of the old figures were – real domestic consumption, petrol smuggled across the border and none-existent petrol that only existed because if was assigned to bogus subsidy claims.”
The Managing Director of NNPC Mele Kyari said last week that he expected that petrol consumption in Nigeria will fall by as much as 30 per cent following the price adjustment.
Oil marketers say it might be too early to get an accurate indication of how low average daily sales will drop but they all admit that sales have generally been falling since the subsidy was removed.
“Yes, we see a drop in sales at our gas stations but it is better to give it sometime before we can make sense of the drop in numbers that we are seeing,” said one independent oil marketer in Lagos.
The NNPC is halting its opaque DSGP arrangement which allowed a few well-connected firms to import petrol on its behalf at a time it became the sole importer of petrol to Nigeria however, oil marketers are now being told they will be allowed to bring in their own petrol from next month and will be able to sell at prices determined by the importers but they are also to secure their FX for such transactions.
Gas-powered vehicles now cost-effective as fuel subsidy ends
Switching to gas-powered vehicles can cushion the impact of petrol subsidy removal as it offers a cleaner, safer, and more affordable alternative to petrol and diesel engines, experts say. The high cost of conversion and concerns about safety have led to many shunning autogas. But with the determination of the new administration of President Bola Tinubu to cut subsidies, which has more than doubled the cost of petrol, autogas now appears more attractive.
This realisation compelled labour unions to demand the implementation of the government’s autogas policies which include the revitalisation of Compressed Natural Gas (CNG) projects in labour centres ignored by the previous administration of former President Buhari, as part of conditions to shelve their planned strike over subsidy removal.
Launched in December 2020, Nigeria’s autogas policy sought to reduce heavy reliance on petrol and promote the use of gas as a cleaner and cheaper energy source for vehicles.
In the pilot phase, the Federal Government would finance the conversion of a million vehicles from petrol to natural gas. These are mostly passenger and haulage vehicles that run on Nigerian roads – by the end of 2021.
This did not happen as labour unions were not amenable to reason. The government continued funding subsidies hence there was no money to provide the infrastructure. Natural gas prices were high and the prevailing harsh economy post-COVID affected the plan.
Investments in refineries to drive Africa’s supply chain dynamics
African Refiners and Distributors Association, ARDA, has stated that investments in refineries, such as that of the newly commissioned Dangote Refinery, would positively impact the petroleum products supply chain dynamics of various African countries.
In a statement by the association, Executive Secretary of ARDA and former Chief Operating Officer, Refining and Petrochemicals of the Nigerian National Petroleum Corporation (NNPC), Anibor Kragha, disclosed that projects such as the Dangote Refinery would play a critical role in driving Africa’s energy transition roadmap.
Kragha commended Alhaji Dangote for the completion and commissioning of the refinery, stating that the project has highlighted the viability of large-scale downstream industry investments that are fundamental for Africa to refine its own crude oil and create a robust, intra-African energy market amidst the global geopolitics and energy transition concerns.
He said: “Successful investments like the Dangote Refinery will positively impact the petroleum products supply chain dynamics of various African countries and will be critical for the continent to develop and implement a unique, integrated, sustainable African Downstream Energy Transition Roadmap that will prioritise cleaner, low-sulphur fuels and carbon emissions reduction efforts in the near-term and mature, cost-effective renewable energy solutions later.”
He noted that in November last year, an ARDA delegation including himself, and top executives from refineries and storage & distribution companies in Senegal (SAR, SENSTOCK and Elton Oil), Cote d’Ivoire (SIR and SMB), Gabon (SOGARA) and Zambia (Indeni) as well as the Department of Hydrocarbons in the Ministry of Cote d’Ivoire and ARSE, the Downstream regulator in Niger Republic toured the Dangote Refinery site and had commended the intense efforts to bring the refinery on stream.
Shell suspends production at the world’s largest floating LNG facility
Shell has halted production at Prelude LNG – the world’s largest floating liquefied natural gas facility offshore Australia – due to a trip, a spokesperson for the supermajor said without giving details when production could resume.
“Production on the Shell-operated Prelude FLNG facility has been temporarily suspended due to a trip,” a spokeswoman for Shell told Reuters. We are working methodically through the stages in the restart process with safety and stability foremost in mind,” the spokeswoman added.
3The Prelude floating LNG production facility offshore northwestern Australia has an annual capacity of 3.6 million tons.
Friday’s incident is the latest issue that Shell has faced at Prelude LNG in the past year. Between July and September last year, production and exports at Prelude LNG were disrupted due to industrial action at the facility as trade unions demanded higher wages.
Trade unions in Australia extended their strike several times between July and September, also extending the period in which the operator Shell was not able to ship LNG from the facility.
Shell exported some LNG cargoes from Prelude during the strike, but production was taking place at reduced rates to match storage capacity amid the disruption of the tanker berthing process for vessels to pick LNG.
After the pay dispute was settled, Shell had to shut down Prelude LNG again at the end of 2022 due to a fire that occurred on December 21. A small fire was detected on board Prelude in a turbine enclosure. While the fire was quickly contained using a hand-held extinguisher, and there were no injuries, production at the facility was shut down again. Prelude LNG resumed output around a month after the incident.
Apart from being a major LNG producer, UK-based supermajor Shell is the world’s largest trader of liquefied natural gas.
We can force down prices of petrol, says IPMAN
The Independent Petroleum Marketers Association of Nigeria (IPMAN) says it has the numerical strength to force down the price of Premium Motor Spirit also known as petrol. Chinedu Okoronkwo, National President of the association, stated this while talking to journalists at a news conference in Abuja.
According to him, his members are totally in support of fuel subsidy removal by President Bola Tinubu and expressed optimism that the unbundling of the downstream sector has opened the doors for more investors to come in.
He expressed optimism that the association has the numerical strength to force down the price of fuel once they start independent importation of the product.
Tinubu had in his inaugural speech on May 29, 2023, announced that fuel subsidy had ended.
He said the 2023 Budget made no provision for fuel subsidy and more so, subsidy payment is no longer justifiable. The announcement caused panic in the oil sector resulting in fuel scarcity and a hike in the price of petrol.
Following the President’s pronouncement, the Nigerian National Petroleum Company (NNPC) Limited announced adjustment in the pump price of petrol which now sells for as high as N500 per litre from N184 per litre.
Local refiners now buy crude in naira at CBN dollar rate
The Federal Government of Nigeria has directed the Nigerian National Petroleum Company Limited (NNPC) to sell crude oil to operators of modular refineries at the official dollar rate of N460/$1 as local refiners face complete shutdown due to lack of feedstock.
According to operators, for the past two months, local refiners have been paying for crude at the global benchmark price but settling in naira at the official exchange rate, a situation that creates another subsidy. Operators, however, sell refined products at market rates, boosting their bottom lines.
Modular refineries are crude oil processing facilities with capacities of up to 30,000 barrels per day (bpd), and are being built as part of plans to curb oil theft and promote peace in the country’s main oil-producing region.
For the past two years, they have been struggling to secure enough crude feedstock to keep their machines running as the Nigerian government prioritises selling its share of oil from joint venture arrangements with local and foreign oil firms to have access to the greenback.
Some of the modular refineries have waited for more than a year to receive crude from NNPC and in the process, their plants are rotting away as they surmount one hurdle to another including a plethora of regulatory approvals they must get from the authorities.
“Nearly all of Nigeria’s requirement for petroleum products is imported, representing a major drain on the country’s depleting foreign reserves but rather than this sparking an aggressive push by NNPC’s senior managers to support the promoters of local refineries, there is as yet no rule or protocol at NNPC for the transition,” an owner of a modular refinery said.
NNPC has taken a 20 percent stake in the Dangote refinery in Lekki, Lagos, and signed a crude oil supply deal with owners of the 600,000bpd plant, but operators of modular refineries, a few months ago say they have waited endlessly for attention from the NNPC.
Russia’s offline primary oil refining capacity seen falling in June
A general view shows the oil refinery of the Lukoil company in Volgograd, Russia in April. Russia’s offline primary oil refining capacity is expected to fall by 38% in June from May to 3.05 million tonnes, industry sources said and Reuters calculations showed.
The expected decline is due to the end of seasonal maintenance works on Russian refineries next month.
Idle primary oil refining capacity has also been revised up for this month by 500,000 tonnes from the previous plan to 5.0 million tonnes due to extended maintenance periods on several refineries.
Future refineries in India may be smaller capacity – minister
India will look at building smaller oil refineries because of problems in acquiring land as it aims to raise its annual refining capacity to 9 million barrels per day (bpd), oil minister Hardeep Singh Puri said.
Oil refining capacity in India, the world’s third biggest oil importer and consumer, is at about 5.2 million bpd.
Global oil producers see India as a stable outlet for their oil as it is expected to account for a quarter of global oil demand growth by 2040.
“Refineries are high cost. We are looking at a large number of 20 million tonnes per annum, smaller ones, because if I make it too big than land acquisition and other issues come in the way,” Puri told reporters on the sidelines of an industry event.
