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Danger Looms as Nigeria Delays Enforcement of Dirty Fuels Import Ban

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  • Danger Looms as Nigeria Delays Enforcement of Dirty Fuels Import Ban

More than one and a half years after the Federal Government banned the importation of dirty fuels into the country, industry players and other stakeholders are still awaiting the enforcement of the ban.

Our correspondent gathered that a report had been submitted to the Federal Government by a committee that included the Department of Petroleum Resources, Standards Organisation of Nigeria, and the Ministry of Environment regarding the plan to shift to low-sulphur fuels.

Most of the petroleum products consumed in the country are imported with sulphur content as high as 1,000 parts per million for petrol and 3,000ppm for diesel.

On December 1, 2016 in Abuja, Nigeria, Benin, Togo, Ghana and Cote d’Ivoire agreed to ban the importation of Europe’s dirty fuels, limiting sulphur in fuels from 3,000 parts per million to 50 ppm.

But the enforcement of the ban failed to come into effect on July 1, 2017 in Nigeria as announced in December 2016 by the then Minister of Environment, Mrs Amina Mohammed.

A petroleum expert, Mr Bala Zakka, who expressed concern on the continued importation of dirty fuels, said, “One of the problems with Nigeria is lack of implementation of policies.”

“How on earth can we be exporting sweet crude that is almost sulphur-free or with a small percentage of sulphur and then be importing refined products with high sulphur content? This tells you that something is definitely wrong with Nigeria.” He spoke in a telephone interview with our correspondent.

The Chief Operating Officer of Refineries and Petrochemicals, NNPC, Mr Anibor Kragha, told the African Refiners Association in March this year that the country would lower the top level of sulphur in diesel to 50 parts per million from 3,000ppm, by July 1, 2018.

Kragha was quoted by Reuters as saying in a presentation during the ARA Week in Cape Town, South Africa, that while Nigeria was committed to cleaner fuel standards, significant costs complicated efforts to meet the deadline.

He also said that the ministries of Environment, Health, Petroleum Resources and Industry and Trade were working together to finalise rules that would be distributed to importers at some point in the second quarter of this year.

According to him, petrol sulphur level cuts will start in October, moving to 300ppm from 1,000ppm, with a target of 150ppm by October 1, 2019.

Kragha said the first shift to cleaner petrol would cost $11.7m per month, and the second, $15.7m per month, adding that the diesel reduction would cost $2.8m per month.

The National Operations Controller, Independent Petroleum Marketers Association of Nigeria, Mr Mike Osatuyi, said, “If we continue to import petroleum products with high sulphur because they are cheaper to the detriment of human lives, does it make sense? So, if it costs more and the lives of people are protected and the environment is safe, it is better.”

He told our correspondent that the increase in the price of the products as a result of the shift to low sulphur content would be marginal.

“The DPR, Federal Ministry of Environment, NNPC, SON, National Automotive Design and Development Council, PPPRA, and Major Oil Marketers Association of Nigeria were part of the committee that worked and reviewed the sulphur level on diesel, petrol and kerosene. They have concluded their report and sent it to the government for implementation,” an official of the Ministry of Petroleum Resources told our correspondent on condition of anonymity.

The United Nations Environment Programme said in December 2016 that the move to ban dirty fuel imports by Nigeria and others would dramatically reduce vehicle emissions and help more than 250 million people to breathe safer and cleaner air.

It noted that a report by Public Eye in September 2016 exposed how European trading companies were exploiting the weak regulatory standards in West African countries, allowing for the exportation of fuels with sulphur levels up to 300 times higher than was permitted in Europe.

In a statement dated September 8, 2017 on its website, the Federal Ministry of Environment said in line with the government’s commitment to reduce emissions to protect human health, it had in collaboration with Ministry of Industry, Trade and Investment/SON and in due consultation with relevant stakeholders successfully reviewed standards of sulphur content in diesel and petro-products.

It said, “The specified level of sulphur that would henceforth be acceptable in petroleum fuels used in the country is as follows: From July 1, 2017, diesel should have maximum sulphur levels of 50 parts per million; petrol should have maximum sulphur levels of 150 ppm; and household kerosene should have maximum sulphur levels of 150 ppm.”

“Petroleum products that have high sulphur content levels produce high emission levels in automotive engines. Such vehicular emissions contain high level of toxic pollutants such as benzenes and particulates that have negative impact on human health and on the environment. Modern vehicles require fuels that meet high quality standards for a more efficient operation of their engines.”

Compared to other parts of the world, such as Europe and North America, fuel quality in many African countries, including Nigeria, remains very poor.

European standards for fuel quality include Euro IV (50ppm for petrol and diesel) and Euro V (10ppm for both).

UNEP, ARA and health campaigners have been pushing West African nations to ban fuels that are illegal in Europe and the United States for years due to what they say are significant health problems associated with sulphur emissions – particularly in dense urban areas such as Lagos.

The region is said to be one of the last on earth where it is legal to sell fuels with sulphur levels at and above 1,000ppm as East and North African nations and major Asian consumer countries such as China and India have already tightened rules.

ARA has developed the AFRI specifications as guidelines for the production of cleaner fuels including AFRI III (300ppm for petrol and 500ppm for diesel), AFRI IV (150ppm for petrol and 50ppm for diesel). Africa aims to produce fuels with the AFRI-4 specifications by 2020.

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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Crude Oil

Middle East Conflict, US Election Push Oil Prices Further

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The ongoing conflict in the Middle East and the election in the United States bolstered crude oil prices on Friday.

Brent crude settled up $1.67, or 2.25 percent to trade at $76.05 a barrel while the US West Texas Intermediate (WTI) crude settled up $1.59, or 2.27 percent to $71.78.

In the week ended Friday, Brent crude oil gained 4 percent while WTI appreciated by 3.7 percent higher.

Market analysts note that the tensions on the geopolitical front especially in the Middle East with Israel against Hamas and Hezbollah, backed by Iran, have supported largely decided prices in the last month.

According to the US Secretary of State, Mr Antony Blinken said there was a sense of urgency in getting to a diplomatic resolution to end the conflict in Lebanon between Israel and Hezbollah, while calling for the protection of civilians.

Officials from the US and Israel are set to restart talks for a ceasefire and the release of hostages in Gaza in the coming days.

Investors continue to await Israel’s response to an Iranian missile attack on October 1 especially after it said it would not strike the country’s nuclear or oil targets and instead opt for military targets. If it had attacked the oil targets, it would have triggered some increase in oil prices.

Now, investors globally are piling into the Dollar and betting on rising volatility ahead of these next crucial two weeks leading up to the November 5 election in the US between Donald Trump and Kamala Harris.

Also, the market is watching an election in Japan and looking forward to plans by three major central banks on interest rates and the UK government presenting its new budget.

Traders are also seeking more clarity on China’s stimulus policies, though analysts do not expect such measures to provide a major boost to oil demand.

Goldman Sachs on Thursday left its oil price forecasts unchanged at between $70 and $85 a barrel for Brent in 2025, expecting the impact from any Chinese stimulus to be modest relative to bigger drivers such as Middle East oil supply.

Bank of America is forecasting Brent crude to average $75 a barrel in 2025 without any rolling back of production cuts by the Organisation of the Petroleum Exporting Countries and its allies, OPEC+ into next year, it said in a note on Friday.

 

 

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Middle East Ceasefire Talks Weaken Oil Prices

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Oil prices eased on Thursday on reports the US and Israel will try to restart talks on a possible ceasefire in Gaza.

Brent oil settled 58 cents, or 0.8 percent lower at $74.38 a barrel while the US West Texas Intermediate (WTI) crude slipped 58 cents, or 0.8 percent to end at $70.19.

The oil market has been gripped by concerns about the ongoing conflict in the Middle East and the possibility that it could result in oil supply disruptions.

Negotiators will gather in Doha, the capital of Qatar, in the coming days to try to restart talks toward a deal for a ceasefire and the release of hostages in Gaza.

Iran fired close to 200 missiles at Israel on October 1 and this led the international crude benchmark, Brent crude to surge about 8 percent during the week ended October 4 on worries Israel would attack Iran’s oil infrastructure.

It fell about 8 percent in the week ended October 18 on reports Israel would not hit energy infrastructure, easing fears of supply disruptions.

Iran, a member of the Organisation of the Petroleum Exporting Countries (OPEC), produces about 4 million barrels per day and backs several groups fighting Israel, including Hezbollah in Lebanon, Hamas in Gaza and the Houthis in Yemen. An attack by Israel will send prices up.

Analysts believe that other Middle Eastern producers Saudi Arabia and the United Arab Emirates (UAE), have enough spare capacity to offset potential losses of supply from Iran.

However, in case the conflict escalates to Iranian proxies targeting oil infrastructure in Iran’s Middle Eastern neighbours, or if Iran moves to block or restrict oil cargo traffic in the Strait of Hormuz, oil prices could spike to triple digits and record highs.

In a related development, Saudi Arabia’s oil export revenues fell to the lowest level in more than three years in August caused by underwhelming oil demand and continued supply constraints from the world’s top crude exporter.

Traders also weighed uncertainty ahead of the US presidential election on November 5 between former president Donald Trump and current Vice President Kamala Harris.

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Energy

Tinubu’s Government to Convert Fuel Stations to CNG Outlets for Cheaper, Cleaner Energy

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The Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, has revealed President Bola Tinubu’s plans to convert fuel stations into Compressed Natural Gas (CNG) outlets to provide Nigerians with an affordable alternative to petrol.

In a statement on Wednesday, while addressing State House correspondents after the Federal Executive Council (FEC) meeting, Ekpo confirmed that the President intends to expand the use of CNG across the country.

The minister emphasized that CNG is here to stay and urged Nigerians to embrace the initiative, adding that it is safe, cheaper, and environmentally friendly.

He said, “We are well aware that the President set up a Presidential Committee on the CNG to drive the CNG project. It is left for us to inform the general public that CNG has come to stay, and we have to follow that route because CNG is safe, cheaper, and protects the environment.

“It is important to note that when you are using CNG, you save a lot of money, a litre of fuel can go for N1000, but you get CNG at N200 per litre, which saves you N800.

“With the passion of Mr President, the push that he has given to us, we’ll try to drive the CNG programme to reach the nooks and crannies of this country.

“We have to take advantage of the natural resources, gas, that God has endowed us with.

“What we produce in our country is more than enough for us to use for CNG; and of course, you know, we are exporting to so many other countries.”

This development follows a recent CNG vehicle explosion at the NIPCO CNG station on Eyean, Auchi Road, Edo State, which resulted in multiple injuries and damage to vehicles in the vicinity.

Fortunately, no deaths were recorded.

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