Markets

Kachikwu: Nigeria’s Refining Demand May Stretch Oil Production

Published

6 years ago

July 31, 2018

Kachikwu: Nigeria’s Refining Demand May Stretch Oil Production

The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, has suggested that upcoming petroleum refining plants in Nigeria could place a lot of demand on the country’s oil production soon, such that it may find it difficult to meet the request of the soon-to-be completed refineries.

Kachikwu, also said the imminent recovery of refining capacity of the four refineries owned and operated by the Nigerian National Petroleum Corporation (NNPC) in Warri, Kaduna, and Port Harcourt, were part of the expected exert pressure on the country’s oil production which is currently around 2.3 million barrels per day (mb).

Government’s statistics had indicated Nigeria currently has a 445,000 barrels a day refining capacity solely accounted for by the NNPC’s four refineries.

This number is however projected to rise with the coming on stream of refineries such as the 650,000 barrels a day Dangote refinery; the Omsa Pillar Astex Company (OPAC) refinery in Delta; as well as the 12,000 barrels a day Azikel refinery, amongst others.

Kachikwu, however stated at a recent meeting at the State House in Abuja, where Nigeria and Niger Republic penned agreements to build a 150,000 barrels a day refinery in Katsina, that with crude supplies from Niger, as well as other refineries coming up, there would be little for exports.

He specifically predicted Nigeria could have challenges providing crude oil for the refineries when they all become operational.

His predictions were however supported by industry experts who suggested an immediate passage of the Petroleum Industry Governance Bill (PIGB) currently with President Muhammadu Buhari for assent, and other associate bills would pave the way for investments into more oil production and reserves increase.

“First you have the Agip refinery that studies are ongoing in Bayelsa that should cover the South-south corridor. You have the Port Harcourt refinery which when they finish refurbishing covers South-south and South-east.

“The Warri and Kaduna are all there including the Dangote in Lagos. About three marginal refineries with two coming on stream and seven with a potential of coming on stream over the next two years. Very soon our problem would be finding sufficient crude to match the requirements of a lot of these refineries,” said Kachikwu, in response to a question on refineries’ projects in the country.

He also spoke about the decision by Nigeria to partner Niger in the new border refinery project, as well as considerations for security in northern Nigeria, which has had terrorists’ attacks across its states in the last few years.

“The decision is to do a pipeline from Niger Republic into a Nigerian border town and construct a refinery with capacity probably between 100,000 and 150,000 barrels a day but it is all dependent on the Nigerien crude volumes.

“It depends on what they find, currently their number is enough to support about 60 to 70,000 barrels per day but lots of field that have been capped will be opened. We hope that as the project goes over the next two years, we will probably have more feed-stock to power a much bigger refinery,” the minister said.

He added: “It is Katsina and there is a potential for extension to Kaduna. Bear in mind this started first from wanting to build a pipeline from Niger to Kaduna refinery. At the board of NNPC we shut that down because the asset quality of the crude from Niger was not the same as our own quality crude.

“We decided to do a refinery that is targeted at the quality of their crude. The shorter the distance, the shorter the pipeline, the smaller the cost required for construction. So, that was the basis for selection.”

On concerns about insecurity, he said: “If we bother about insecurity we are not going to make progress. The security issues are there, we will deal with them. Niger hasn’t faced much of a security issue in terms of finding its crude, the distance in the pipeline corridor is going to be short and hopefully technology will bury it sufficiently not to be an issue.”

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Samed Olukoya

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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Energy

Marketers’ Plan To Boycott Dangote Refinery For Imported Petrol Stirs Fresh Concern In Nigeria Petroleum Sector

Published

2 days ago

September 20, 2024

Ugwoke Ogbodo

A fresh crisis is brewing in Nigeria’s Petroleum Industry over the new price list for Premium Motor Spirit (PMS), known as petrol.

The Nigerian National Petroleum Company had announced price adjustments for its retail outlets nationwide upon lifting Dangote Petrol, saying petrol will sell between N950 to N1,019.22 per liter depending on the location.

The development had created a price controversy between Dangote Refinery and NNPC. NNPC had insisted that it bought Dangote Petrol at a per liter pump price of N898, but the 650,000 barrels per day Lagos-based refinery had disagreed with the state-owned firm.

Displeased by the price regime of Dangote Refinery and in extension, NNPC, petrol marketers considered the importation of petrol.

Investors King gathered that about 141 million liters of PMS are being conveyed to Nigeria by oil vessels by oil marketers despite the availability of Dangote Refinery petrol.

Checks revealed that the oil marketers’ move followed the full deregulation of the downstream oil sector by the Federal Government.

However, the development has angered the Crude Oil Refiners Association of Nigeria which kicked against the abandonment of local petrol for foreign products.

The Publicity Secretary of CORAN, Eche Idoko, who condemned the shipment of foreign petrol in a statement raised the alarm that some imported petrol was substandard and was blended in Malta or Togo.

He said aside from the fact that the substandard products imported to the country would cause damage, Idoko assured Nigerians that the Dangote Refinery petrol will pay them way better than the regime of importing petroleum products.

Idoko called for backward integration, saying some were afraid that Dangote would become a monopoly.

According to him, oil marketers are nursing the fear that Dangote will become a monopoly, but he noted that the mere fact Dangote subscribed to CORAN, there would never be monopoly.

He added that with the Petroleum Industry Act in place and all the agencies in play, there is no way that Dangote can become a monopoly.

Earlier, the Nigerian Midstream and Downstream Petroleum Regulatory Authority had declared that imported petrol would be subjected to three tests before being allowed to be sold across the country.

NMDPRA spokesperson, George Ene-Ita, disclosed this amid petrol import concerns.

He stressed that marketers with import licenses were free to import PMS but noted that the products must be subjected to three major tests by the agency.

The President of Dangote Group, Aliko Dangote had earlier in May 2024 stated that the commencement of his refinery will end fuel importation in Nigeria.

Energy

NLC Describes President Tinubu’s Involvement In Dangote Refinery Petrol Pricing As ‘Fraud’

Published

3 days ago

September 19, 2024

Bassey Marshall

The President of the Nigeria Labour Congress (NLC), Joe Ajaero, has described the involvement of the President Bola Tinubu-led government in deciding the price of petrol produced by Dangote Refinery as fraud.

Ajaero spoke during a media briefing at the Murtala Muhammed Airport in Lagos on Wednesday.

According to him, the inconsistencies in policies and fraudulent actions of the Tinubu-led administration are the cause of the ongoing conflict between the Nigerian National Petroleum Company Limited (NNPCL) and Dangote Refinery.

The NLC President criticised the current administration for attempting to interfere with the operations of private entities like Dangote.

He countered the government’s attempt to dictate the price of petrol produced by Dangote, describing it as fraudulent.

Ajaero said: “In a truly deregulated market, there should be no interference in how private sector entities like Dangote operate. Imposing restrictions or dictating prices goes against the principles of a free market.

“For a locally produced product, with no reliance on imported dollars or landing costs, they’re demanding he sells it at the same price as the imported ones. That’s both fraudulent and unacceptable.

“What you’re witnessing is a mix of fraud and policy inconsistency. Nigerians were led to believe that the sector had been deregulated, and in a deregulated market, competition and choice should prevail. So why is there now an attempt to control how much Dangote should sell his product for?

“When the Port Harcourt refinery becomes operational, both NNPC and Dangote should be able to sell freely. But trying to dictate Dangote’s pricing is dishonest.

“This is the time for Nigerians to speak out. We were told that deregulation would put the private sector in charge and limit government interference in business. Now, the government is trying to regulate how private businesses should price their products.

“They expect him to sell at the same price as the imported product, even though it was produced locally without the additional landing costs. That’s outright fraud.”

Crude Oil

Oil Prices Gain Amid U.S. Production Woes and Rate Cut Expectations

Published

5 days ago

September 17, 2024

Samed Olukoya

Crude gained on Tuesday following Hurricane Francine disruption in the U.S. and the possibility of an interest rate cut in the U.S.

These two factors have boosted traders’ sentiment in the oil market despite concerns about global demand and slowing growth in China.

Brent crude oil, against which Nigerian oil is priced, rose by 36 cents, or 0.5% to $73.11 per barrel while the U.S. crude oil gained 53 cents, or 0.8% to settle $70.62 per barrel.

Both closed higher in the previous trading session as the market reacted to the impact of Hurricane Francine on U.S. Gulf Coast production.

More than 12% of crude oil production and 16% of natural gas output in the Gulf of Mexico remained offline as of Monday, according to the U.S.

According to the Bureau of Safety and Environmental Enforcement (BSEE), the disruption has raised concerns over short-term supply shortages and contribution to the upward momentum in prices.

Yeap Jun Rong, a market strategist at IG said “while the market is seeing near-term stabilization, the fragile state of China’s economy and anticipation of the U.S. Federal Reserve’s interest rate decision could limit further gains.”

The Federal Open Market Committee (FOMC) is expected to announce a rate cut later this week, with futures markets pricing in a 69% chance of a 50-basis-point reduction.

Lower interest rates are favourable for oil prices as they reduce borrowing costs and encourage economic growth.

“Growing expectations of an aggressive rate cut are lifting sentiment across the commodities sector”, stated ANZ analysts.

The market, however, remains cautious due to lower-than-expected demand from China, the world’s largest importer of the commodity.

Chinese data released over the weekend showed that China’s oil refinery output dropped for the fifth consecutive month in August. This signals weaker domestic demand and declining export margins.