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Commuters Groan as Fuel Scarcity Returns to Lagos

Lagosians expressed concern about the region’s impending fuel crisis

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Petrol - Investors King

Commuters in Lagos State have expressed concern about the region’s impending fuel crisis. Not only is it difficult for motorists to obtain fuel, but transportation fares have also risen as a result of the scarcity of fuel.

The scarcity of fuel first appeared in October, when it hit various parts of Nigeria, forcing motorists to spend hours at filling stations battling for the product.

Black marketers charged between N300 and N400 per litre of gasoline in many regions of the nation. 

However, since Monday, commuters have bemoaned the rise in transportation costs in the state, with gasoline costing between N195 and N200 per litre.

As of Wednesday, many gas stations either didn’t sell fuel or did so at exorbitant prices. 

Investors King learned that some drivers were unable to fill up their vehicles from commuters at Agege. One of the commuters claimed that the inability to purchase fuel prevented him from taking his car outside. In a similar vein, the driver stated that he would park his car somewhere and board a commercial vehicle to travel to Lagos Island.

“As it stands, I’m going to park somewhere after I get the passengers out of the car so my friend can help me get fuel. Considering that I might spend up to three hours on the third mainland bridge, I cannot drive this vehicle to the island; it is not worth it. 

According to an online report, queues were reported along the Alausa Secretariat road, as the NNPC (former Oando) was closed to motorists. The same situation was also noticed at Total filling stations in Ojota and Palm Grove on Tuesday. 

The Independent Petroleum Marketers Association of Nigeria blamed it on the depots and the increasing difficulty in accessing petroleum products.

National Controller, Operations, IPMAN, Mike Osatuyi, reportedly said that members of the association could not get sufficient products at the depots.

“No fuel. Even when we were able to get small quantity, DAPPMAN sold it to us at N200/N202 per litre. By the time we transport it to our stations, the cost would be around N210/litre,” he said.

He added that getting petrol to members’ filling stations from the depots now cost as much as N200 per litre in some instances.

If the Federal Government moved forward with implementing the new tax regime, the executive secretary of the Depot and Petroleum Products Marketers Association, Olufemi Adewole, warned that the tax could force businesses to close their doors and exacerbate the scarcity crisis.

Adewole argued that petroleum marketing companies could not sustainably pay such a sum due to the inadequate trading margins of these companies.

Petroleum marketers have a very low operating margin, but their turnover is very high, according to Adewole. Regrettably, the margin does not reflect the turnover.

He revealed that marketers continued to receive the same margins when fuel prices increased to N160 and N200 from the margins they were receiving when a litre was sold for N40.

He stated, “The Finance Act 2020 states that the marketers must pay 0.5% of their gross turnover by the end of this year.

If the new tax regime is implemented, “it is unthinkable that probably half of the petroleum marketing firms existing now may go out of business,” he said, unless the regulator, the Nigerian Midstream and Downstream Petroleum Regulatory Authority, approves a new margin for the marketers.

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Crude Oil

Oil Prices Climb as Markets Eye Potential US Rate Cuts in September

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Oil prices rose during the Asian trading session today on speculation that the U.S. Federal Reserve may begin cutting interest rates as soon as September.

Brent crude oil, against which Nigerian oil is priced, increased by 32 cents to $82.95 a barrel, while U.S. West Texas Intermediate crude oil climbed 34 cents to $80.47.

The anticipation of rate cuts stems from recent U.S. inflation and labor market data indicating a trend towards disinflation and balanced employment, according to ANZ Research.

The Federal Reserve is set to review its policy on July 30-31, with expectations of holding rates steady but providing clues for potential cuts in September.

The potential rate cuts could stimulate economic activity, increasing demand for oil. This optimism has been partially offset by recent concerns over China’s slower-than-expected economic growth, which could dampen global oil demand.

President Joe Biden’s announcement to not seek re-election and endorse Vice President Kamala Harris had minimal impact on oil markets.

Analysts suggest that U.S. presidential influence on oil production is limited, although a potential Trump presidency could boost oil demand due to his stance against electric vehicles.

In response to economic challenges, China surprised markets by lowering key policy and lending rates. While these measures aim to bolster the economy, analysts remain cautious about their immediate impact on oil demand.

With OPEC+ production cuts continuing to support prices, the focus remains on the U.S. Federal Reserve’s next moves.

Any decision to cut rates could further influence oil prices in the coming months, highlighting the interconnectedness of global economic policies and energy markets.

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Dangote Refinery Clash Threatens Nigeria’s Oil Sector Stability

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Nigeria’s oil and gas sector is facing a new challenge as a dispute between Dangote Industries Limited and the Nigerian Midstream and Downstream Petroleum Regulatory Agency (NMDPRA) intensifies.

The disagreement centers on claims by NMDPRA that diesel from the Dangote Refinery contains high sulfur levels, making it inferior to imported products.

The $20 billion Dangote Refinery, located near Lagos, has the potential to process half of Nigeria’s daily oil output, promising to reduce dependency on foreign fuel imports and create thousands of jobs.

However, the recent accusations have cast a shadow over what should be a significant achievement for Africa’s largest economy.

Industry experts warn that the ongoing conflict could deter future investments in Nigeria’s oil sector.

“Regulatory uncertainty is a major disincentive for investors,” said Luqman Agboola, head of energy at Sofidia Capital. “Any factor affecting foreign investment impacts the entire value chain, risking potential energy deals.”

The regulatory body, led by Farouk Ahmed, maintains that Nigeria cannot rely solely on the Dangote facility to meet its petroleum needs, emphasizing the need for diverse sources.

This position has stirred controversy, with critics accusing the agency of attempting to undermine a vital national asset.

Amidst these tensions, energy analyst Charles Ogbeide described the agency’s comments as reckless, noting that the refinery is still in its commissioning stages and is working to optimize its sulfur output.

In response, Dangote Industries has called for fair assessments of its products, asserting that their diesel meets African standards.

The refinery’s leadership argues that certain factions may have ulterior motives, aiming to stifle progress through misinformation.

As the dispute continues, the broader implications for Nigeria’s oil sector remain uncertain. The outcome will likely influence not only domestic production but also the country’s standing in the global energy market.

Observers hope for a resolution that supports both industrial growth and regulatory integrity, ensuring stability in a sector crucial to Nigeria’s economy.

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Nigeria Pumps 236.2 Million Barrels in First Half of 2024

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markets energies crude oil

Nigeria pumped 236.2 million barrels of crude oil in the first half of 2024, according to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).

This figure represents an increase from the 219.5 million barrels produced during the same period in 2023.

In January, Nigeria produced 44.2 million barrels of crude oil while February saw a slight dip to 38.3 million barrels, with March following closely at 38.1 million barrels.

April and May production stood at 38.4 million barrels and 38.8 million barrels, respectively. June’s output remained consistent at 38.3 million barrels, demonstrating a stable production trend.

Despite the overall increase compared to 2023, the 2024 production figures still fall short of the 302.42 million barrels produced in the same period in 2020.

This ongoing fluctuation underscores the challenges facing Nigeria’s oil sector, which has experienced varying production levels over recent years.

On a daily basis, Nigeria’s crude oil production showed some variability. In January, the average daily production peaked at 1.43 million barrels per day (mbpd), the highest within the six-month period.

February’s production dropped to 1.32 mbpd, with a further decrease to 1.23 mbpd in March. April saw a modest increase to 1.28 mbpd, which then fell again to 1.25 mbpd in May. June ended on a positive note with a slight rise to 1.28 mbpd.

The fluctuations in daily production rates have prompted government and industry leaders to address underlying issues.

Mele Kyari, Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPC), has highlighted the detrimental effects of oil theft and vandalism on Nigeria’s production capabilities.

Kyari emphasized that addressing these security challenges is critical to boosting production and attracting investment.

Kyari also noted recent efforts to combat illegal activities, including the removal of over 5,800 illegal connections from pipelines and dismantling more than 6,000 illegal refineries.

He expressed confidence that these measures, combined with ongoing policy reforms, would support Nigeria’s goal of increasing daily production to two million barrels.

The Nigerian government remains focused on stabilizing and enhancing oil production. With recent efforts showing promising results, there is cautious optimism that Nigeria will achieve its production targets.

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