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Oil Marketers Lament as Petrol Ex-depot Price Increases by 110% in Four Months

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Petrol Importation - investorsking.com

Oil marketers in Nigeria under the aegis of the Independent Petroleum Marketers Association of Nigeria (IPMAN) have decried the ex-depot price of Premium Motor Spirit (PMS) known as petrol which increased by 110 percent in four months.

According to the data report from the industry, in October, the ex-depot price read N148 per litre while in February, it recorded N312 per litre.

Investors King gathered that the stipulated price by the Nigerian National Petroleum Company Limited (NNPCL) for the depots to sell PMS to oil marketers is N148 per litre but was recently increased to N172 per litre.

In the report issued by the Major Oil Marketers Association of Nigeria, the least average ex-depot price of petrol within the four months was N303 per litre.

It explained that the lowest price of N303 per litre was seen at Apapa depots, while petrol was sold at N305 per litre in Ibafon depots. However, the highest price recorded within the timeframe was at Satellite depot for N312 per litre.

The price increase has been attributed to fuel scarcity which has made pump prices rise from N179/N180 per litre to as high as N500/litre in some places.

According to the Depots and Petroleum Products Marketers Association of Nigeria (DAPPMAN), the price hike is as a result of rising foreign exchange rate, illegal levies, high cost of daughter vessels amongst others.

Oil Marketers have also lamented the high cost of transporting petroleum products from the depots to their stations as well as high running costs.

The IPMAN Chairman, Satellite Depot, Akin Akinrinade charged the Federal Government on the need to jerk up the rehabilitation of the nation’s refineries for massive local production.

“The lasting solution is for the refineries to start functioning and we begin local refining,” he said.

Also speaking on the subject, Operations Controller, IPMAN Mike Osatuyi, called for the removal of fuel subsidy and deregulation in the industry to solve the fuel scarcity challenge. 

“The permanent solution is to deregulate and remove subsidies. Allow the market to be a free market where marketers other than the NNPC will be able to bring in products. Since the government said the subsidy will be removed in June, let’s wait and see, but until then, we have to manage,” Osatuyi stated.

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Energy

Nigeria Targets $5bn Investments in Oil and Gas Sector, Says Government

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Crude Oil - Investors King

Nigeria is setting its sights on attracting $5 billion worth of investments in its oil and gas sector, according to statements made by government officials during an oil and gas sector retreat in Abuja.

During the retreat organized by the Federal Ministry of Petroleum Resources, Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, explained the importance of ramping up crude oil production and creating an environment conducive to attracting investments.

He highlighted the need to work closely with agencies like the Nigerian National Petroleum Company Limited (NNPCL) to achieve these goals.

Lokpobiri acknowledged the challenges posed by issues such as insecurity and pipeline vandalism but expressed confidence in the government’s ability to tackle them effectively.

He stressed the necessity of a globally competitive regulatory framework to encourage investment in the sector.

The minister’s remarks were echoed by Mele Kyari, the Group Chief Executive Officer of NNPCL, who spoke at the 2024 Strategic Women in Energy, Oil, and Gas Leadership Summit.

Kyari stressed the critical role of energy in driving economic growth and development and explained that Nigeria still faces challenges in providing stable electricity to its citizens.

Kyari outlined NNPCL’s vision for the future, which includes increasing crude oil production, expanding refining capacity, and growing the company’s retail network.

He highlighted the importance of leveraging Nigeria’s vast gas resources and optimizing dividend payouts to shareholders.

Overall, the government’s commitment to attracting $5 billion in investments reflects its determination to revitalize the oil and gas sector and drive economic growth in Nigeria.

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Nigeria’s Rig Count Surges by 23% in February 2024

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Oil

In February 2024, Nigeria’s oil and gas exploration activities surged with rig count increasing by 23% compared to the previous year.

The rig count, a crucial index measuring upstream activities, climbed to 16 rigs from the 11 rigs recorded during the same period in 2023.

This leap in exploration activities comes as a positive development for Nigeria’s oil and gas sector, indicating growing momentum and investor confidence in the industry.

Gbenga Komolafe, Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), attributed this sustained surge to the positive impact of the recently enacted Petroleum Industry Act (PIA).

The PIA, with its provisions for institutional governance, efficient administration, and attractive fiscal regimes, has created a conducive environment for investment and operations in the country’s oil and gas sector.

Despite the remarkable increase in exploration activities, Nigeria’s crude oil production for the month declined to 1.32 million barrels per day (mbpd), compared to January’s output of 1.46 mbpd.

This decrease highlights the challenges faced by the Nigerian oil industry, including infrastructure constraints, security issues in oil-producing regions, and operational disruptions.

To further enhance exploration efforts, Komolafe announced a strategic partnership with TGS-Petrodata to acquire approximately 56,000 square kilometers of 3D Seismic Gravity data, focusing on the Niger Delta deep and Ultra Deep Offshore regions.

This initiative aims to mitigate risks associated with exploration in challenging environments, with investors financing the project and resulting revenues to be shared between the government and TGS.

Looking ahead, Komolafe expressed optimism about sustained growth in oil exploration activities throughout 2024, with plans for an upcoming oil licensing round, a critical step in implementing the nation’s PIA and driving further advancements in the oil and gas sector.

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NNPC Faces Mounting Subsidy Burden as Oil Prices Skyrocket

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Petrol - Investors King

The Nigerian National Petroleum Corporation (NNPC) is facing an increasingly daunting subsidy burden as oil prices continue to surge.

Investigation has revealed that escalating crude oil prices pose a significant challenge to Africa’s largest oil producer, placing immense pressure on the government’s finances and the state-owned NNPC.

Brent, the benchmark for Nigeria’s crude oil, has skyrocketed from an average of $77 in January to as high as $86 per barrel.

While this surge in oil prices could potentially boost funding for Nigeria’s 2024 budget, which is anchored on a benchmark of $77.96 per barrel, the country’s inability to meet production quotas hampers its capacity to capitalize on the revenue influx from oil sales.

One of the primary consequences of soaring oil prices is the ballooning petrol subsidy burden borne by the NNPC.

Despite the government’s imposition of a cap on petrol retail prices, the widening gap between the landing cost and the pump price necessitates substantial subsidies to sustain consumer affordability.

Charles Akinbobola, a Lagos-based energy analyst, elucidated that the combination of a higher exchange rate, elevated oil prices, and static petrol retail prices compounds the subsidy dilemma for Nigeria.

With the country’s limited refining capacity mandating the importation of all petroleum products, the subsidy burden further intensifies, straining NNPC’s resources.

The opacity surrounding the subsidy program, coupled with reports of NNPC’s utilization of Nigeria LNG dividends to fund petrol subsidies, raises concerns about transparency and accountability.

Faith Akinnagbe, an energy lawyer, emphasizes the urgency of disclosing NNPC’s subsidy expenditures to ensure public accountability and oversight.

As Nigeria grapples with the repercussions of surging oil prices, the NNPC faces an uphill battle in managing its burgeoning subsidy obligations amidst fiscal constraints and economic uncertainties.

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