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NNPC May Adjust Petrol Pump Price on Falling Cargo Rates

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NNPC - Investors King
  • NNPC May Adjust Petrol Pump Price on Falling Cargo Rates

The Nigerian National Petroleum Corporation (NNPC) may undertake a downward review of the pump price of petrol in its retail outlets across the country.

The paper yesterday gathered from an authoritative source within the corporation in Abuja that this was possible from a reported consistent drop in the historical price of petroleum cargoes from about $600 per metric tonne to an average of $440 per metric tonne.

NNPC had recently adjusted the pump price of petrol at its outlets, thus raising fears of a possible hike. The development also followed claims in August by its former Group Managing Directors that the government’s pricing modulation framework was not economical for the downstream petroleum business.

The source however stated that the cargo price is one of the key elements often considered by the Petroleum Products Pricing and Regulatory Agency (PPPRA) in its calculation of the template for petrol pump price.

This, he noted, has been on the downward trend and could necessitate the corporation reviewing its pump price to reflect the market realities. The other key element being the foreign exchange has been left floating by the Central Bank of Nigeria (CBN).

He also explained that the corporation has spent a lot of energies securing its petrol supplies and distribution networks to keep the country from what he described as system sabotage during the yuletide season by some marketers.

“One of the things we wanted to achieve is to ensure that we do not have queues in this time of the year and a lot of the energies have been spent on securing that. If you look at the market trend at the moment, we have been fortunate. Historically, it is this time of the year that cargo prices are about $500 to $600 per metric tonne, and this is one of the two key elements on the PPPRA templates that nobody controls – it is down to market forces,” he said.

According to him, “The cargo price is usually between $500 and $600 per metric tonne, but this year, we have even had cargoes for $440. The pricing has been good. Our network is a mix of the NNPC and others, because of the open market forex policy, the cost of doing business for others is higher.

What NNPC retail has done is to adjust the price to accommodate the additional expense of doing business around this time of the year.

“The N145 per litre is not just the margin but includes freights and all sorts of other expenses; we did that to accommodate the expenses and as we get cheaper and cheaper cargoes, we will adjust our prices in accordance.”

Meanwhile, the Oil Producers Trade Section (OPTS) of the Lagos Chamber of Commerce and Industry (LCCI) has said about 50 million standard feet per day (mscuf/d) of gas which translates to $120 million revenue potential and 150 to 200 megawatts (MW) of power is being flared at oil fields in Nigeria.

A representative of the OPTS at the recent consultative session for the draft National Gas Policy, Mr. James Ajaifi disclosed this during a panel discussion on the policy. OPTS is the sectoral group for local and foreign-owned companies registered in Nigeria and holding an oil prospecting or oil mining licence.

The group said the government would have to address the issues of gas flaring in the policy document to enable the country maximise its gas resources for development.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

Oil Prices Continue to Slide: Drops Over 1% Amid Surging U.S. Stockpiles

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Crude Oil

Amidst growing concerns over surging U.S. stockpiles and indications of static output policies from major oil-producing nations, oil prices declined for a second consecutive day by 1% on Wednesday.

Brent crude oil, against which the Nigerian oil price is measured, shed 97 cents or 1.12% to $85.28 per barrel.

Similarly, U.S. West Texas Intermediate (WTI) crude slumped by 93 cents or a 1.14% fall to close at $80.69.

The recent downtrend in oil prices comes after they reached their highest level since October last week.

However, ongoing concerns regarding burgeoning U.S. crude inventories and uncertainties surrounding potential inaction by the OPEC+ group in their forthcoming technical meeting have exacerbated the downward momentum.

Market analysts attribute the decline to expectations of minimal adjustments to oil output policies by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, until a full ministerial meeting scheduled for June.

In addition to concerns about excess supply, the market’s attention is also focused on the impending release of official government data on U.S. crude inventories, scheduled for Wednesday at 10:30 a.m. EDT (1430 GMT).

Analysts are keenly observing OPEC members for any signals of deviation from their production quotas, suggesting further volatility may lie ahead in the oil market.

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Energy

Nigeria Targets $5bn Investments in Oil and Gas Sector, Says Government

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Crude Oil - Investors King

Nigeria is setting its sights on attracting $5 billion worth of investments in its oil and gas sector, according to statements made by government officials during an oil and gas sector retreat in Abuja.

During the retreat organized by the Federal Ministry of Petroleum Resources, Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, explained the importance of ramping up crude oil production and creating an environment conducive to attracting investments.

He highlighted the need to work closely with agencies like the Nigerian National Petroleum Company Limited (NNPCL) to achieve these goals.

Lokpobiri acknowledged the challenges posed by issues such as insecurity and pipeline vandalism but expressed confidence in the government’s ability to tackle them effectively.

He stressed the necessity of a globally competitive regulatory framework to encourage investment in the sector.

The minister’s remarks were echoed by Mele Kyari, the Group Chief Executive Officer of NNPCL, who spoke at the 2024 Strategic Women in Energy, Oil, and Gas Leadership Summit.

Kyari stressed the critical role of energy in driving economic growth and development and explained that Nigeria still faces challenges in providing stable electricity to its citizens.

Kyari outlined NNPCL’s vision for the future, which includes increasing crude oil production, expanding refining capacity, and growing the company’s retail network.

He highlighted the importance of leveraging Nigeria’s vast gas resources and optimizing dividend payouts to shareholders.

Overall, the government’s commitment to attracting $5 billion in investments reflects its determination to revitalize the oil and gas sector and drive economic growth in Nigeria.

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Commodities

Palm Oil Rebounds on Upbeat Malaysian Exports Amid Indonesian Supply Concerns

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Palm Oil - Investors King

Palm oil prices rebounded from a two-day decline on reports that Malaysian exports will be robust this month despite concerns over potential supply disruptions from Indonesia, the world’s largest palm oil exporter.

The market saw a significant surge as Malaysian export figures for the current month painted a promising picture.

Senior trader David Ng from IcebergX Sdn. in Kuala Lumpur attributed the morning’s gains to Malaysia’s strong export performance, with shipments climbing by a notable 14% during March 1-25 compared to the previous month.

Increased demand from key regions like Africa, India, and the Middle East contributed to this impressive growth, as reported by Intertek Testing Services.

However, amidst this positivity, investors are closely monitoring developments in Indonesia. The Indonesian government’s contemplation of revising its domestic market obligation policy, potentially linking it to production rather than exports, has stirred market concerns.

Edy Priyono, a deputy at the presidential staff office in Jakarta, indicated that this proposed shift aims to mitigate vulnerability to fluctuations in export demand.

Yet, it could potentially constrain supply availability from Indonesia in the future to stabilize domestic prices.

This uncertainty surrounding Indonesian policies has added a layer of complexity to palm oil market dynamics, prompting investors to react cautiously despite Malaysia’s promising export performance.

The prospect of Indonesian supply disruptions underscores the delicacy of global palm oil supply chains and their susceptibility to geopolitical and regulatory factors.

As the market navigates these developments, stakeholders remain attentive to both export data from Malaysia and policy shifts in Indonesia, recognizing their significant impact on palm oil prices and market stability.

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