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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.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Crude Oil

Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

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Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

Oil retreated from an earlier rally with investment banks and traders predicting the market can go significantly higher in the months to come.

Futures in New York pared much of an earlier increase to $63 a barrel as the dollar climbed and equities slipped. Bank of America said prices could reach $70 at some point this year, while Socar Trading SA sees global benchmark Brent hitting $80 a barrel before the end of the year as the glut of inventories built up during the Covid-19 pandemic is drained by the summer.

The loss of oil output after the big freeze in the U.S. should help the market firm as much of the world emerges from lockdowns, according to Trafigura Group. Inventory data due later Tuesday from the American Petroleum Institute and more from the Energy Department on Wednesday will shed more light on how the Texas freeze disrupted U.S. oil supply last week.

Oil has surged this year after Saudi Arabia pledged to unilaterally cut 1 million barrels a day in February and March, with Goldman Sachs Group Inc. predicting the rally will accelerate as demand outpaces global supply. Russia and Riyadh, however, will next week once again head into an OPEC+ meeting with differing opinions about adding more crude to the market.

“The freeze in the U.S. has proved supportive as production was cut,” said Hans van Cleef, senior energy economist at ABN Amro. “We still expect that Russia will push for a significant rise in production,” which could soon weigh on prices, he said.

PRICES

  • West Texas Intermediate for April fell 27 cents to $61.43 a barrel at 9:20 a.m. New York time
  • Brent for April settlement fell 8 cents to $65.16

Brent’s prompt timespread firmed in a bullish backwardation structure to the widest in more than a year. The gap rose above $1 a barrel on Tuesday before easing to 87 cents. That compares with 25 cents at the start of the month.

JPMorgan Chase & Co. and oil trader Vitol Group shot down talk of a new oil supercycle, though they said a lack of supply response will keep prices for crude prices firm in the short term.

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Crude Oil

Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

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Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

Oil prices rose on Monday as the slow return of U.S. crude output cut by frigid conditions served as a reminder of the tight supply situation, just as demand recovers from the depths of the COVID-19 pandemic.

Brent crude was up $1.38, or 2.2%, at $64.29 per barrel. West Texas Intermediate gained $1.38, or 2.33%, to trade at $60.62 per barrel.

Abnormally cold weather in Texas and the Plains states forced the shutdown of up to 4 million barrels per day (bpd) of crude production along with 21 billion cubic feet of natural gas output, analysts estimated.

Shale oil producers in the region could take at least two weeks to restart the more than 2 million barrels per day (bpd) of crude output affected, sources said, as frozen pipes and power supply interruptions slow their recovery.

“With three-quarters of fracking crews standing down, the likelihood of a fast resumption is low,” ANZ Research said in a note.

For the first time since November, U.S. drilling companies cut the number of oil rigs operating due to the cold and snow enveloping Texas, New Mexico and other energy-producing centres.

OPEC+ oil producers are set to meet on March 4, with sources saying the group is likely to ease curbs on supply after April given a recovery in prices, although any increase in output will likely be modest given lingering uncertainty over the pandemic.

“Saudi Arabia is eager to pursue yet higher prices in order to cover its social break-even expenses at around $80 a barrel while Russia is strongly focused on unwinding current cuts and getting back to normal production,” said SEB chief commodity analyst Bjarne Schieldrop.

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Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

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Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

Oil prices rose to $65.47 per barrel on Thursday as crude oil production dropped in the US due to frigid Texas weather.

The unusual weather has left millions in the dark and forced oil producers to shut down production. According to reports, at least the winter blast has claimed 24 lives.

Brent crude oil gained $2 to $65.47 on Thursday morning before pulling back to $64.62 per barrel around 11:00 am Nigerian time.

U.S. West Texas Intermediate (WTI) crude rose 2.3 percent to settle at $61.74 per barrel.

“This has just sent us to the next level,” said Bob Yawger, director of energy futures at Mizuho in New York. “Crude oil WTI will probably max out somewhere pretty close to $65.65, refinery utilization rate will probably slide to somewhere around 76%,” Yawger said.

However, the report that Saudi Arabia plans to increase production in the coming months weighed on crude oil as it can be seen in the chart below.

Prince Abdulaziz bin Salman, Saudi Arabian Energy Minister, warned that it was too early to declare victory against the COVID-19 virus and that oil producers must remain “extremely cautious”.

“We are in a much better place than we were a year ago, but I must warn, once again, against complacency. The uncertainty is very high, and we have to be extremely cautious,” he told an energy industry event.

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