The Nigerian National Petroleum Company Limited (NNPCL) has called for prompt completion of Nigeria’s refineries as it projected an annual savings of N367 billion when completed.
In his explanation, the Group Chief Executive Officer of NNPC, Mele Kyari, stated that locally refining crude oil into Premium Motor Spirit (PMS) popularly called Petrol would reduce the logistics cost of its supply by N17 per litre.
Investors King gathered that NNPC distributes over 60 million litres of petrol daily to oil marketers in the country. With a N17 per litre deduction, Nigeria will save N1.02 billion daily and N367 billion yearly.
Oil Marketers, having estimated the gains called on the Dangote Refinery management and the Federal Government, through NNPC to hasten up work on Nigeria’s refineries for commencement of local PMS production.
Kyari, being interviewed on a Television programme assured that work has been intensified to get the Port Harcourt and Warri refineries completed before the first half of this year end.
The NNPC Boss, however, noted that when the refining is done locally and petrol is produced, significant reduction in price of petrol might not follow.
His words, “this understanding that once you start local refining prices will crash, this is not so. It is very unlikely to play out that way, because firstly, crude oil will continue to be the major feedstock for every refinery. 70 per cent of your operation cost always come from crude, as your feedstock, and this is priced at the international market.
“However, two things will change when we start local refining. It gives you security of supply. Now, when you place an order, it takes you 14 days to get these (petroleum) products from Europe into our country and that can be a matter of concern. Any glitch with weather, war situation, or something happens, you’ll run into trouble, but once you’re producing locally, the products become very close to you and the issue of energy security becomes much more assured.
“Secondly, the in-country refining of crude reduces the logistics cost, because for you to move products from Europe to Nigeria, probably it is going to cost you about N21/litre today. But when you bring it closer home, you are probably going to need N7 or N8/litre to move it from one location, all things being equal.”
Crude Oil Dips Slightly on Friday Amid Demand Concerns
On Friday, global crude oil prices experienced a slight dip, primarily attributed to mounting concerns surrounding demand despite signs of a tightening market.
Brent crude prices edged lower, nearing $83 per barrel, following a recent uptick of 1.6% over two consecutive sessions.
Similarly, West Texas Intermediate (WTI) crude hovered around $78 per barrel. Despite the dip, market indicators suggest a relatively robust market, with US crude inventories expanding less than anticipated in the previous week.
The oil market finds itself amidst a complex dynamic, balancing optimistic signals such as reduced OPEC+ output and heightened tensions in the Middle East against persistent worries about Chinese demand, particularly as the nation grapples with economic challenges.
This delicate equilibrium has led oil futures to mirror the oscillations of broader stock markets, underscoring the interconnectedness of global economic factors.
Analysts, including Michael Tran from RBC Capital Markets LLC, highlight the recurring theme of robust oil demand juxtaposed with concerning Chinese macroeconomic data, contributing to market volatility.
Also, recent attacks on commercial shipping in the Red Sea by Houthi militants have added a risk premium to oil futures, reflecting geopolitical uncertainties beyond immediate demand-supply dynamics.
While US crude inventories saw a slight rise, they remain below seasonal averages, indicating some resilience in the market despite prevailing uncertainties.
Nigeria’s Oil Rig Count Soars From 11 to 30, Says NUPRC CEO
The Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe, has announced a surge in the country’s oil rig count.
Komolafe disclosed that Nigeria’s oil rigs have escalated from 11 to 30, a substantial increase since 2011.
Attributing this surge to concerted efforts by NUPRC and other governmental stakeholders, Komolafe highlighted the importance of instilling confidence, certainty, and predictability in the oil and gas industry.
He explained the pivotal role of the recently implemented Petroleum Industry Act (PIA), which has spurred significant capital expenditure amounting to billions of dollars over the past two and a half years.
Speaking in Lagos after receiving The Sun Award, Komolafe underscored the effective discharge of NUPRC’s statutory mandate, which has contributed to the success stories witnessed in the sector.
The surge in Nigeria’s oil rig count signifies a tangible measure of vibrant activities within the upstream oil and gas sector, reflecting increased drilling activity and heightened industry dynamism.
Also, Komolafe noted that NUPRC has issued over 17 regulations aimed at enhancing certainty and predictability in industry operations, aligning with the objectives outlined in the PIA.
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