Connect with us

Markets

Danger Looms as Nigeria Delays Enforcement of Dirty Fuels Import Ban

Published

on

oil
  • 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/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.

Continue Reading
Comments

Crude Oil

Brent Crude Hovers Above $84 as Demand Rises in U.S. and China

Published

on

Crude Oil - Investors King

Brent crude oil continued its upward trajectory above $84 a barrel as demand in the United States and China, the two largest consumers of crude globally increased.

This surge in demand coupled with geopolitical tensions in the Middle East has bolstered oil markets, maintaining Brent crude’s resilience above $84 a barrel.

The latest data revealed a surge in demand, particularly in the U.S. where falling crude inventories coincided with higher refinery runs.

This trend indicates growing consumption patterns and a positive outlook for oil demand in the world’s largest economy.

In China, oil imports for April exceeded last year’s figures, driven by signs of improving trade activity, as exports and imports returned to growth after a previous contraction.

ANZ Research analysts highlighted the ongoing strength in demand from China, suggesting that this could keep commodity markets well supported in the near term.

The positive momentum in demand from these key economies has provided a significant boost to oil prices in recent trading sessions.

However, amidst these bullish indicators, geopolitical tensions in the Middle East have added further support to oil markets. Reports of a Ukrainian drone attack setting fire to an oil refinery in Russia’s Kaluga region have heightened concerns about supply disruptions and escalated tensions in the region.

Also, ongoing conflict in the Gaza Strip has fueled apprehensions of broader unrest, particularly given Iran’s support for Palestinian group Hamas.

Citi analysts emphasized the geopolitical risks facing the oil market, pointing to Israel’s actions in Rafah and growing tensions along its northern border. They cautioned that such risks could persist throughout the second quarter of 2024.

Despite the current bullish sentiment, analysts anticipate a moderation in oil prices as global demand growth appears to be moderating with Brent crude expected to average $86 a barrel in the second quarter and $74 in the third quarter.

The combination of robust demand from key economies like the U.S. and China, coupled with geopolitical tensions in the Middle East, continues to influence oil markets with Brent crude hovering above $84 a barrel.

As investors closely monitor developments in both demand dynamics and geopolitical events, the outlook for oil prices remains subject to ongoing market volatility and uncertainty.

Continue Reading

Crude Oil

Brent Plunges Below $83 Amidst Rising US Stockpiles and Middle East Uncertainty

Published

on

Brent crude oil - Investors King

The global oil declined today as Brent crude prices plummeted below $83 per barrel, its lowest level since mid-March.

This steep decline comes amidst a confluence of factors, including a worrisome surge in US oil inventories and escalating geopolitical tensions in the Middle East.

On the commodity exchanges, Brent crude, the international benchmark for oil prices, experienced a sharp decline, dipping below the psychologically crucial threshold of $83 per barrel.

West Texas Intermediate (WTI) crude oil, the US benchmark, also saw a notable decrease to $77 per barrel.

The downward spiral in oil prices has been attributed to a plethora of factors rattling the market’s stability.

One of the primary drivers behind the recent slump in oil prices is the mounting stockpiles of crude oil in the United States.

According to industry estimates, crude inventories at Cushing, Oklahoma, the delivery point for WTI futures contracts, surged by over 1 million barrels last week.

Also, reports indicate a significant buildup in nationwide holdings of gasoline and distillates, further exacerbating concerns about oversupply in the market.

Meanwhile, geopolitical tensions in the Middle East continue to add a layer of uncertainty to the oil market dynamics.

The Israeli military’s incursion into the Gazan city of Rafah has intensified concerns about the potential escalation of conflicts in the region.

Despite efforts to broker a truce between Israel and Hamas, designated as a terrorist organization by both the US and the European Union, a lasting peace agreement remains elusive, fostering an environment of instability that reverberates across global energy markets.

Analysts and investors alike are closely monitoring these developments, with many expressing apprehension about the implications for oil prices in the near term.

The recent downturn in oil prices reflects a broader trend of market pessimism, with indicators such as timespreads and processing margins signaling a weakening outlook for the commodity.

The narrowing of Brent and WTI’s prompt spreads to multi-month lows suggests that market conditions are becoming increasingly less favorable for oil producers.

Furthermore, the strengthening of the US dollar is compounding the challenges facing the oil market, as a stronger dollar renders commodities more expensive for investors using other currencies.

The dollar’s upward trajectory, coupled with oil’s breach below its 100-day moving average, has intensified selling pressure on crude futures, exacerbating the latest bout of price weakness.

In the face of these headwinds, some market observers remain cautiously optimistic, citing ongoing supply-side risks as a potential source of support for oil prices.

Factors such as the upcoming June meeting of the Organization of the Petroleum Exporting Countries (OPEC+) and the prospect of renewed curbs on Iranian and Venezuelan oil production could potentially mitigate downward pressure on prices in the coming months.

However, uncertainties surrounding the trajectory of global oil demand, geopolitical developments, and the efficacy of OPEC+ supply policies continue to cast a shadow of uncertainty over the oil market outlook.

As traders await official data on crude inventories and monitor geopolitical developments in the Middle East, the coming days are likely to be marked by heightened volatility and uncertainty in the oil markets.

Continue Reading

Crude Oil

Oil Prices Climb on Renewed Middle East Concerns and Saudi Supply Signals

Published

on

Crude oil

As global markets continue to navigate through geopolitical uncertainties, oil prices rose on Monday on renewed concerns in the Middle East and signals from Saudi Arabia regarding its crude supply.

Brent crude oil, against which Nigeria’s oil is priced, surged by 51 cents to $83.47 a barrel while U.S. West Texas Intermediate crude oil rose by 53 cents to $78.64 a barrel.

The recent escalation in tensions between Israel and Hamas has amplified fears of a widening conflict in the key oil-producing region, prompting investors to closely monitor developments.

Talks for a ceasefire in Gaza have been underway, but prospects for a deal appeared slim as Hamas reiterated its demand for an end to the war in exchange for the release of hostages, a demand rejected by Israeli Prime Minister Benjamin Netanyahu.

The uncertainty surrounding the conflict was further exacerbated on Monday when Israel’s military called on Palestinian civilians to evacuate Rafah as part of a ‘limited scope’ operation, sparking concerns of a potential ground assault.

Analysts warned that such developments risk derailing ceasefire negotiations and reigniting geopolitical tensions in the Middle East.

Adding to the bullish sentiment, Saudi Arabia announced an increase in the official selling prices (OSPs) for its crude sold to Asia, Northwest Europe, and the Mediterranean in June.

This move signaled the kingdom’s anticipation of strong demand during the summer months and contributed to the upward pressure on oil prices.

The uptick in prices comes after both Brent and WTI crude futures posted their steepest weekly losses in three months last week, reflecting concerns over weak U.S. jobs data and the timing of a potential Federal Reserve interest rate cut.

However, with most of the long positions in oil cleared last week, analysts suggest that the risks are skewed towards a rebound in prices in the early part of this week, particularly for WTI prices towards the $80 mark.

Meanwhile, in China, the world’s largest crude importer, services activity remained in expansionary territory for the 16th consecutive month, signaling a sustained economic recovery.

Also, U.S. energy companies reduced the number of oil and natural gas rigs operating for the second consecutive week, indicating a potential tightening of supply in the near term.

As global markets continue to navigate through geopolitical uncertainties and supply dynamics, investors remain vigilant, closely monitoring developments in the Middle East and their impact on oil prices.

Continue Reading
Advertisement




Advertisement
Advertisement
Advertisement

Trending