National oil company in Nigeria declares state of emergency

The declaration is part of the Nigeria National Petroleum Company's efforts to revive the crippling crude production in the country. NNPC CEO Mele Kyari says the company plans to work with its partners in the oil industry to eliminate all identified obstacles to efficient production. For more than two years, Nigeria has failed to meet its OPEC production quota.

CGTN

Nigeria beats Ghana, South Africa to host $5bn African Energy Bank

The Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, disclosed this while speaking to journalists after a virtual meeting of the council of ministers of the African Petroleum Producers Organisation (APPO) on Thursday.

Nigeria emerged as the preferred host nation amidst stiff competition from Ghana, Benin, Algeria, South Africa, and Côte d'Ivoire.

What the minister said:

“As the Minister for Petroleum Resources (Oil), I am incredibly proud of this achievement. The African Energy Bank will be a cornerstone for financing and advancing energy projects across Africa, promoting innovation, sustainability, and economic growth,"

“The African Energy Bank will be a cornerstone for financing and advancing energy projects across Africa, promoting innovation, sustainability, and economic growth,"

He stressed that the development is a remarkable victory for Nigeria and the entire African continent.

"It symbolizes our collective efforts to harness and develop our rich energy resources for a brighter, more sustainable future. Thank you to everyone who made this possible. Together, we are shaping the future of energy in Africa, starting right here in Nigeria,” he said.

Lokpobiri also noted that the bank’s share capital, set at $5 billion, is expected to be subscribed over three years, with an initial capital of $1.5 billion reserved for APPO member countries.

Presently, APPO has a total of 18 members across Africa, all of which are either oil or gas-producing nations, or both.

AfreximBank has been supporting APPO in establishing the bank and has approved an investment of $1.75 billion for this purpose.

The lender stated it had partnered with over 700 banks across Africa and its partners to chart a profitable pathway for the African energy sector.

By Adekunle Agbetiloye, Business Insider Africa

Shell Nigeria sale must be free of conflict of interests

Reacting to the hiring by the Nigerian oil regulator of the Boston Consulting Group (BCG) and S&P Global to help scrutinize the sale of Shell’s onshore assets in the country, Isa Sanusi, Amnesty International Nigeria Director, said:

“The government regulator overseeing Shell’s sale of its onshore assets in Nigeria must avoid any perceived conflict of interests by ensuring and guaranteeing the full independence of any consultants it uses to review Shell’s proposed sale of its assets in Nigeria.

“The decision by the Nigerian Upstream Petroleum Regulatory Commission to hire BCG, which already performs a wide variety of other work for Shell, to help assess this sale is concerning. It is similarly worrying that S&P Global, which also plays a key role in rating Shell’s debt and creditworthiness as well as providing other services to the oil company, is also involved.

“Given the enormous human rights risks at stake it is essential that reviews of the sale are not just independent – but seen to be independent. Shell must be held fully to account for the oil spills related to the business it is selling, which for decades have polluted the environment, contaminated drinking water and poisoned agricultural land, fisheries and people.

“Any assurances from these consultancy groups that their reviews will be divorced from their wider commercial interests with Shell are unlikely to allay worries that they could soft pedal on the remedies required to address the human rights abuses related to Shell’s activities.

“It is also essential that the potential buyers of the business have the ability and financial stability to manage the operations safely and effectively to ensure local communities are not exposed to further harms. The deal should not be allowed to proceed unless a series of safeguards are in place that fully protect people’s rights.”
 

Background

Shell announced in January that it had agreed to sell the Shell Petroleum Development Company of Nigeria (SPDC) to the Renaissance consortium, which comprises four exploration and production companies based in Nigeria and an international energy group, in a deal worth up to US$2.4 billion, financed partly with a loan to the buyers from Shell.

Amnesty International

Related story: Advocacy Groups Call for Halt to Shell's Planned Exit from Nigeria

Nigerian oil regulator approves Eni, Equinor assets sale

Nigeria's upstream oil regulator has approved two key onshore assets sale by international oil companies, clearing the way for Oando and new entrant Project Odinmim, to acquire assets, the head of the agency, Gbenga Komolafe, said on Wednesday.

Nigerian Upstream Petroleum Regulatory Commission (NUPRC) greenlit deals by Eni's (ENI.MI), opens new tab local unit Nigerian Agip Oil Company (NAOC) to Oando (OANDO.LG), opens new tab and Equinor (EQNR.OL), opens new tab to Project Odinmim, Komolafe announced at an energy conference in Abuja, the capital.

The deals had been pending for months as they required sign-off from the petroleum minister under a recently enacted oil industry law. Approvals for Exxon Mobil's $1.3 billion asset sale to Seplat and Shell's divestment to Renaissance remain pending.

"The signing ceremony will be conducted in the next few days," Komolafe said.

Eni had previously announced the sale of its NAOC subsidiary to Oando in September. The deal included interests in four onshore oil mining leases (OML) 60, 61, 62, and 63.

The NUPRC showed in a chart that of four transactions in the oil sector so far, two have been approved, one was on a yellow flag and the other in abeyance.

Oil majors operating in Nigeria have been exiting their onshore fields hampered by theft, vandalism and pollution to focus on deepwater explorations.

In May, the NUPRC offered faster approvals for pending asset sales by the majors if they took responsibility for spills and compensated communities rather than wait for authorities to apportion liability, which could lead to further delay deals. 

By Camillus Eboh, Reuters

Nigeria goes to “war” against oil production challenges

The state-owned Nigerian National Petroleum Company (NNPC) has declared a state of emergency on production in Nigeria’s oil and gas industry in an effort to increase its crude oil production and reserves.

At the Nigeria Oil & Gas Conference and Exhibition in Abuja on 2 July, NNPC’s CEO, Mele Kyari, said: “We have declared war on the challenges affecting our crude oil production. War means war. We have the right tools. We know what to fight.”

He added: “We know what we must do at that level of assets. We have engaged our partners and will work together to improve the situation.”

According to Kyari, a detailed analysis of assets revealed that Nigeria could easily produce two million barrels of crude oil per day without deploying new rigs.

Yet, in Nigeria the “inability of players to act in a timely manner” remains a challenge.

NNPC plans to replace all crude oil pipelines built more than 40 years ago and introduce a rig-sharing programme with its partners to ensure the lifespan of the production rigs is four to five years, as part of its medium to long-term measures to boost and sustain production.

Kyari stated that the "war" would enable NNPC and its partners to promptly overcome all identified challenges, to create more effective and efficient production, and reducing delays in procurement processes.

The company plans to invest in essential midstream gas infrastructure including the Obiafu-Obrikom-Oben (OB3) and the Ajaokuta-Kaduna-Kano gas pipelines to enhance domestic gas production and supply for electricity generation.

Nigerian President Bola Tinubu has consistently reiterated his administration's commitment to supporting increased domestic gas utilisation, improving the country's power generation capacity, revitalising industries and creating numerous job opportunities for economic development.

Along with one of its partners, NIPCO Gas, the government-owned energy company has constructed several compressed natural gas (CNG) stations, 12 of which will be commissioned on 4 July in Lagos and Abuja.

The CNG initiative aims to transition Nigeria from using petrol and diesel as vehicular combustion fuel. Tinubu stated in May that significant advancements have also been made in promoting gas development through various presidential directives.

Offshore Technology reported that the three gas plants launched on 15 May 2024 in the country’s Delta and Imo states would boost the country’s gas supply by 25%, once they operate at full capacity.

Nigeria’s oil exploration and production regulator aims to increase the country’s oil and condensates production to 2.6 million barrels per day (mbbl/d) by 2026, marking a significant increase from 2023 production levels of around 1.6mbbl/d.

"Nigeria goes to “war” against oil production challenges" was originally created and published by Offshore Technology, a GlobalData owned brand.

By Smruthi Nadig, Global Data

Dangote Refinery in Nigeria says it is operating normally after fire

Nigeria's Dangote Refinery is operating normally after a fire at its effluent treatment plant, it said on Wednesday, after videos circulated online of dark plumes of smoke at the 650,000 barrel-per-day facility.

The refinery is located in Lekki, roughly 80 kilometres east of Nigeria's commercial capital Lagos.

Dangote's spokesperson Anthony Chiejina did not provide a reason for the fire at the refinery, which was built at a cost of $20 billion by Africa's richest man Aliko Dangote.

"We have swiftly contained a minor fire incident at our effluent treatment plant (ETP)," Chiejina said.
"There is no cause for alarm as the refinery is operating and there is no recorded injury or body harm to all our staff on duty."

The refinery started production in January and will be the largest in Africa and Europe when it reaches full capacity. It could upend what has been a highly lucrative Europe-to-Africa fuel trade and transform Nigeria into an exporter of fuels.

Dangote has said gasoline deliveries from the refinery were delayed until July.

By Isaac Anyaogu, Reuters 

Related story: Dangote refinery receives first crude cargo in Nigeria

 

Over 1,800 fuel outlets shut in Nigeria over smuggling dispute

Nearly 2,000 petrol outlets were shut in Nigeria's northeast to protest against an anti-smuggling operation that targeted some operators, the local head of the petroleum marketers association said on Monday, forcing motorists to buy from the black market.

Dahiru Buba, the chairman of the Independent Petroleum Marketers Association of Nigeria (IPMAN) for Adamawa and Taraba states, said petrol stations stopped operations after the Nigeria Customs Service impounded tanker trucks and shut some fuel outlets on suspicion they were smuggling petrol to neighbouring Cameroon.

Black market fuel vendors in Cameroon, Benin and Togo have for years relied on cheap gasoline smuggled from Nigeria.

When Nigeria scrapped a petrol subsidy last year, that black market trade collapsed, but the product has become cheaper again after Nigeria capped the price since June 2023 despite its currency sharply weakening.

Under "Operation Whirlwind", Customs initially impounded some tanker trucks belonging to IPMAN members and released them after the association protested. But more trucks were seized and several fuel stations were shut, forcing fuel station operators to close outlets en-masse in protest, said Buba.

"We wrote to them (Nigeria Customs) again but there were no responses that is why we decided to go on strike," he said, adding that over 1,800 outlets had ceased to operate.

"This is our business and we cannot be quiet when our members are treated this way."

Mangsi Lazarus, Customs spokesperson for Adamawa and Taraba said tanker trucks were seized because they were being used to smuggle petrol.

In Adamawa capital Yola, black market traders quickly took advantage of the shortages to sell petrol for 1,400 naira ($0.9459) a litre, compared to between 650 and 750 naira at the pump.

By Percy Dabang, Reuters

Related stories: Nigerian Authorities Defend Decision to Burn Vessel Carrying Allegedly Stolen Oil

Nigeria Tracks Down Bunker Vessel and Holds it on Oil Theft Charges

Nigeria oil licence auction attracts huge interest

Nigeria is expanding the number of oil blocks slated for auction in its 2024 licensing round as well as extending the deadline for ending the exercise amid keen interest in the offer, the oil regulator told Reuters on Thursday.

Nigeria opened a licensing round in April offering a total of 19 onshore and deepwater oil blocks to investors. This has now been expanded to include an additional 17 deep offshore blocks to the 2024 licensing round.

"We have undertaken more exploratory activities and as a result acquired more data to expand the offer and extend the deadline. This has given rise to tremendous interest from investors," Gbenga Komolafe, head of Nigerian Upstream Regulatory Commission (NUPRC) said.

Komolafe said that registration, which had been slated to close on June 25, has been extended by 10 days. Bid submissions would open on July 8 and close on Nov. 29.

The oil regulator is seeking to deepen exploitation of the country's estimated 37.5 billion barrels of crude oil and 209.26 trillion cubic feet of natural gas reserves.

It has tried to sweeten the offer by cutting entry fees called signature bonus from around $200 million per field to $10 million, promised a fair and transparent process and allowed online submissions through its website. Bidders also have the option to lease single units of oil blocks or in clusters.

Nigeria is seeking to halt the flow of investments to African rivals Angola and Namibia by improving the ease of acquiring oil blocks.

Nigeria, a member of the Organization of the Petroleum Exporting Countries (OPEC), has seen its oil production decline from around 2 million barrels a decade ago to just over 1.4 million barrels per day.

Oil majors are leaving onshore fields - prone to sabotage and frequent claims to compensation for spills - to focus on deepwater fields where disruptions are less common. 

By Isaac Anyaogu, Reuters

Video - Motorists in Nigeria still face shortages a year after subsidy removal

Despite being one of Africa's top crude producers, Nigeria relies on fuel imports to meet its energy needs. According to energy experts, the country needs to boost local crude refining capacity to increase fuel supply.

CGTN 

Related story: President Tinubu defends end to fuel subsidy

 

Video - Farmers in Nigeria grapple with soaring transport costs

Transportation expenses in Nigeria have surged by over 200 percent in the past year, severely impacting the agricultural sector and escalating food prices, according to farmers and analysts.

CGTN

Related story: Video - Soaring fuel prices in Nigeria threaten agricultural prosperity

 

Stranded cargo shows credit challenges at Dangote refinery in Nigeria

Chinese state energy major PetroChina has been waiting to unload a cargo of U.S. crude at Nigeria's giant new refinery for nearly a month due to payment issues, according to four trading sources and shipping data.

The impasse highlights difficulties the $20 billion plant funded by Africa's richest man Aliko Dangote faces in its aim to be the biggest refinery on the continent and in Europe when it reaches full capacity this or next year.

Dangote aims to reverse the trend by which the oil-rich country exports its crude but almost totally relies on imports of fuel and other refined products.

The 2-million-barrel West Texas Intermediate (WTI) crude cargo shipped by PetroChina onboard supertanker Maran Mira has, however, been floating off Nigeria since March 28, shipping data on LSEG and Kpler showed.

The completion of the oil sale from PetroChina to Dangote has been delayed as the refinery has yet to issue a letter of credit to the Chinese trader, one source familiar with the matter said.

A letter of credit is the most common form of trade finance. A buyer's bank sends a letter to the seller's bank guaranteeing payment to the seller once goods arrive.

PetroChina was also not keen to receive oil products as payment, one of the ways that Dangote has been paying for its crude, the source said.

Two of the sources also told Reuters that the refinery has had difficulty accessing dollars through the Nigerian government, with the naira's slide against the U.S. dollar as global oil prices have risen straining Nigeria's finances.

The government did not immediately respond to a request for comment and a Dangote executive did not directly address the issue in comments to Reuters.

PetroChina has another 2 million barrels of WTI crude onboard supertanker Kondor that is making its way to Nigeria, according to another source and LSEG shiptracking data.

Potential sellers of U.S. WTI crude to Dangote have been confronted with difficult payment terms: either a 60 to 90 credit or an exchange of refined products for the crude oil, three of the sources said. Credit terms for oil deals are typically 30 days.

PetroChina did not respond to a Reuters request for comment.

A shipbroker estimated that the ship is incurring demurrage costs of around $65,000 a day.

Dangote group executive Edwin Devakumar told Reuters that seeking favourable sale prices and credit terms were normal business practices.

"If someone gives me one year credit, I'll grab it and if not, I'll negotiate the best possible deal," he said. "When you go to a shop to buy something ... You'll try the best possible deal and I do the same".

"We are not delayed. If someone's business is delayed, he is not giving us a good deal," Devakumar said, without specifically addressing the issue with PetroChina.

RAMPING UP

The refinery started operations in January and has reached half its capacity in recent weeks but a further increase is being slowed by its need to borrow billions of dollars in working capital to be able to buy large volumes of crude, trading sources said.

Devakumar declined to comment on the current run rates at the refinery.

The facility is importing around 10 crude oil cargoes a month, two traders said, roughly half the capacity of 650,000 barrels per day (bpd) it seeks to reach this year or next, which would make it the largest refinery in Africa and Europe.

The amount of Nigerian and U.S. crude discharged at Dangote totalled 8.4 million barrels in March and 5.4 million barrels so far in April, Kpler data showed. Another 1 million barrels of Nigerian crude is expected to arrive on April 27.

Trafigura, Mercuria, Vitol, Shell and NNPC were among Dangote's suppliers of crude last month, according to Kpler. 

By Florence Tan, Reuters 

Related stories: Video - Nigeria government directs crude oil be sold to domestic refineries first

Dangote refinery supplies petroleum products to local market in Nigeria

Video - Nigeria government directs crude oil be sold to domestic refineries first

Nigerian authorities introduced new regulations to enable domestic refineries to pay for crude supply from oil producers in the country in the local currency. The government also introduced a new directive requiring producers to first sell crude oil to local refineries. The actions will hopefully reduce Nigeria's dependence on imported petrol products.

CGTN

Related stories: Analysts skeptical about improvement of local crude refining in Nigeria

Dangote refinery supplies petroleum products to local market in Nigeria

 

 

Analysts skeptical about improvement of local crude refining in Nigeria

Nigeria has been Africa’s largest or second-largest oil exporter for years, but relies heavily on imports to meet local energy needs. The government is trying to change that, saying the country’s four moribund oil refineries will be revived and put back in operation.

This week, authorities also announced a new policy that oil producers must sell a share of their crude oil to local refiners before they are permitted to export crude.

Nigeria’s petroleum regulatory commission announced the new Domestic Crude Oil Supply Obligation (DCSO) during a meeting with industry players. It's part of an amendment to Nigeria’s Petroleum Industry Act of 2021.

Under the policy, Nigerian oil producers are allowed to export crude only after meeting their supply obligations to local refiners.

The measure will take effect in the second half of the year, but it does not specify what quantity of crude must be supplied to local refineries.

Authorities said the objectives of the guideline are to bolster Nigeria’s refining capacity, improve the oil industry and earn foreign exchange.

Public affairs analyst Jaye Gaskiya said it was the right move. "In the current situation globally, this is actually going to turn out much more beneficial to both the producers and refiners in the country," Gaskiya said. "Essentially this is designed to ease the problem of supply to the local refineries so that they don't become redundant. The second thing is that it is also designed in such a manner to ease the pressure on the naira," which is the currency of Nigeria.

According to the regulations, payments for crude to domestic refiners can be made in dollars, naira or a combination of both.

Nigeria relies heavily on imports to meet the population’s energy needs. Analysts say refining crude oil locally could reverse this trend.

But oil and gas analyst Toyin Akinosho said he had concerns.

"In principle, I do not have a problem with it, but we need to be very careful about the foreign exchange implications and also the volumes that are going out," he said. "My challenge has always been, if you are overzealous about certain regulations, you can burn your fingers. In an era of very low forex [currency trading] and this being the major avenue for inflow into the country, you have to find a way of managing it."

The new measure includes penalties for oil producers who divert crude oil or refiners who fail to meet payment obligations.

But Gaskiya said there were some loose strings to the rule.

"The regulation says it is on the basis of willing buyer and willing seller, and that's quite tricky," Gaskiya said. "A situation where you have the suppliers, for instance, being unwilling, what are you then going to do as the regulator? So those are the things that the regulator needs to be on the lookout for."

The refineries in Nigeria, including the latest one built by Africa's richest man, Aliko Dangote, will have a combined processing capacity of 650,000 barrels of crude oil per day when rehabilitated.

While experts have doubts the new guidelines will be effective, authorities are optimistic Nigeria is getting closer to its goal of having a self-sufficient energy sector.

By Timothy Obiezu, VOA 

Related story: Dangote refinery supplies petroleum products to local market in Nigeria

Libya overtakes Nigeria as Africa's largest oil producer

Nigeria strikes deal with Shell to supply $3.8 bln methanol project

Nigeria has struck a deal for Shell to supply gas to its proposed $3.8 billion Brass methanol facility, resolving a major hurdle to a final investment decision on the project, the minister of state for gas said on Thursday.

Nigeria, which holds Africa's largest natural gas reserves of more than 200 trillion cubic feet, has struggled to tap the commodity due to capital constraints and a lack of infrastructure.

Minister Ekperikpe Ekpo said in a statement that the Gas Supply and Purchase Agreement, crucial for the Brass methanol project, will be executed next month following successful talks with Shell's Nigeria CEO and executives from other companies involved.

The GSPA will secure a long-term gas supply from a Shell-operated joint venture for the methanol production facility that will be built on Brass Island in the oil-rich coastal Bayelsa state.

"The NNPC/Shell joint venture partners are now fully committed to uninterrupted gas supply for the development of the Brass Methanol project," Ekpo said.

"Mr President is very passionate about this project and wants something positive to happen in respect of the Brass Methanol project before the end of May this year," Ekpo said.

The project includes a gas processing plant, a methanol production and refining site, and product export facilities.

By Camillus Eboh, Reuters

Related story: Amnesty International says Nigeria must stop Shell Niger Delta business sale

 

Amnesty International says Nigeria must stop Shell Niger Delta business sale

More than 40 civil society organisations call for proposed sale to be blocked as it risks worsening human rights abuses

Deal appears to fall far short of several regulatory and legal requirements

There have been hundreds of oil spills from Shell infrastructure in the Niger Delta during its decades of operation

‘There’s a substantial risk Shell will walk away with billions of dollars, leaving those already harmed facing continued abuse’ - Isa Sanusi

The proposed sale of Shell’s onshore oil business in the Niger Delta region of southern Nigeria risks worsening human rights abuses and should be blocked by the Government unless a series of safeguards are put in place, a group of 40 civil society organisations including Amnesty International said today.

In an open letter to the Nigerian industry regulator, the signatories said the sale of Shell Petroleum Development Company to Renaissance Africa Energy should not be allowed to proceed unless the environmental pollution it caused has been fully assessed, it provides sufficient funds to guarantee clean-up costs, and local communities have been fully consulted.

The letter highlights how the deal appears to fall far short of several regulatory and legal requirements including the apparent lack of an environmental study to assess clean-up requirements, and an evaluation to ensure sufficient funds are set aside for potential decommissioning of oil infrastructure - a sum likely to amount to several billions of US dollars.

It also notes the lack of an inventory of the physical assets being sold, which potentially indicates the state of disrepair of pipelines and infrastructure that caused leaks which have frequently had devastating consequences on local people’s health and wellbeing.

Isa Sanusi, Amnesty International’s Nigeria Director, said:

​“There is now a substantial risk Shell will walk away with billions of dollars from the sale of this business, leaving those already harmed without remedy and facing continued abuse and harms to their health.

​“Guarantees and financial safeguards must be in place to immediately remedy existing contamination and to protect people from future harms before this sale should be allowed to proceed.

​“Shell must not be permitted to slip away from its responsibilities for cleaning up and remedying its widespread legacy of pollution in the area.”

​Olanrewaju Suraju, chairman of Human and Environmental Development Agenda , commented:

“Shell’s operations in the Niger Delta over many decades have come at the cost of grievous human rights abuses of the people living there. Frequent oil leaks from its infrastructure and inadequate maintenance and clean-up practices have left groundwater and drinking water sources contaminated, poisoned agricultural land and fisheries, and severely damaged the health and livelihoods of inhabitants.”

Hundreds of oil spills

There have been hundreds of oil spills from Shell infrastructure during the decades it has been operating in Nigeria.

​Renaissance Africa Energy is a consortium consisting of ND Western Limited, Aradel Holdings Plc, FIRST Exploration and Petroleum Development Company Limited, the Waltersmith Group and the Petrolin Group.

The letter with a full list of signatories is available here. 

Amnesty International

Related story: Video - Challenges arise as Shell plans exit from Nigeria

Libya overtakes Nigeria as Africa's largest oil producer

Libya overtook Nigeria as the top African crude oil producer for March, data from the Organization of Petroleum Exporting Countries (OPEC) has shown. According to the April 2024 Monthly Oil Market Report (MOMR), Libya recorded 1.236 million barrels per day (bpd) of crude production in March, up from 1.173 million bpd in February.

Meanwhile, Nigeria recorded an output of 1.23 million barrels per day in March 2024, compared to 1.32 bpd in February 2024. Despite the drop in output by 6.8 per cent, Nigeria retained its leadership position on the continent, producing 1.398 million bpd, while Libya produced 1.161 million bpd during the period.

“According to secondary sources, total OPEC-12 crude oil production averaged 26.60 mb/d in March 2024, 3 tb/d higher, m-o-m. Crude oil output increased mainly in IR Iran, Saudi Arabia, Gabon, and Kuwait, while production in Nigeria, Iraq, and Venezuela decreased.”

According to direct communications from OPEC, the recent drop in the country’s crude production can be attributed to a surge in pipeline vandalism and crude oil theft incidents in its oil-producing region.

Experts weighed in, saying that this has led to a decline in business activity and subdued consumer spending, high input-cost inflation, and lower employment levels compared with the previous year.

In other news, the Dangote oil refinery in Nigeria has started supplying petroleum products to the local market, a major step in the country's journey towards energy self-sufficiency. Devakumar Edwin, an executive at Dangote Group, confirmed the arrival of diesel and jet fuel shipments in the local market.

Abubakar Maigandi, head of the Independent Petroleum Marketers Association of Nigeria, also said that local oil marketers reached an agreement on the price of diesel at 1,225 naira ($0.96) per litre following a bulk purchase deal. Maigandi noted that the association's members oversee about 150,000 retail stations throughout Nigeria. 

By Victor Oluwole, Business Insider Africa

Related story: NNPC faces $3 billion backlog on petrol payments

NNPC faces $3 billion backlog on petrol payments

Nigeria's state-oil company NNPC owes around $3 billion to fuel traders for imported petrol, three sources told Reuters, as the tumbling naira currency and rising global fuel prices have increased the effective subsidy it is paying.

The payment backlog is a blow to the government's efforts in Africa's largest economy to shore up its strained finances by curbing costly energy subsidies.

"They are paying, but it's slow," one of the sources with knowledge of the matter said. Five sources said that NNPC - the country's main importer of petrol - was taking more than 130 days to make the payments instead of within 90 days.

An NNPC spokesperson said the company was "not aware of any such debt nor any financial issues of such magnitude".

"Our focus remains on sustaining sufficiency in the supply of petroleum products in Nigeria," the spokesperson said.

NNPC's suppliers, including international traders like Vitol, Mercuria and Gunvor as well as Nigeria-based trading houses, are still supplying fuel, the sources said. They declined to be named because they are not authorised to speak to the media. The trading firms declined to comment.

But the payment delays underscore the creeping return of fuel subsidies - scrapped in May 2023 - that sap NNPC's cash for imports and what it can send to President Bola Tinubu's government.

Nigeria had subsidised fuel for years to keep pump prices affordable, but Tinubu removed them as part of wider reforms, allowing prices to triple. Petrol consumption fell by around 30% as higher prices curbed smuggling to neighbouring countries.

In June, the government capped pump prices at a nationwide average of 617 naira per litre as Nigerians grappled with punishing inflation.

"It's hard to overstate the significance of fuel subsidies for the administration," said Clementine Wallop, director for sub-Saharan Africa at political risk consultancy Horizon Engage.

"It was subsidy removal and exchange rate reform that had investors and lenders initially positive about his administration, and it was their removal Tinubu hoped would give his team the ability to spend in the many other areas that need funding."

Nigeria is almost wholly reliant on fuel imports due to years of mismanagement and under-investment at state-owned oil refineries.

QUEUES AND BACKLOG OF BILLS

Last week, motorists queued for petrol across Nigeria's commercial capital Lagos, due to a shortage of fuel from depots. Clement Isong, head of the Major Oil Marketers Association (MOMAN), said logistical issues over Easter caused the constraints, which would soon abate.

Oil industry sources said rising global gasoline prices and a weaker naira had also impacted NNPC's ability to import.

At their peak in February, market prices for petrol in West Africa were 1,229 naira per litre, 150% above the level the government capped prices in June, according to pricing data from Argus Media converted with tracking site Aboxifx naira rates. They have since fallen to around 912 naira per litre, still 295 naira above the capped price.

That left NNPC as the sole importer of the roughly 40 million litres per day the country consumes, as private importers cannot recoup their costs.

Since the naira has slid against the dollar and oil prices have risen, NNPC is losing money on every litre sold, traders said.

The International Monetary Fund recently warned that capping pump prices and electricity tariffs below cost recovery could shave up to 3% off GDP in 2024.

"The government still needs to begin formulating a plan to remove the fuel subsidy when conditions allow," Tellimer's Patrick Curran said in a note. 

By Libby George and Julia Payne, Reuters

Dangote refinery supplies petroleum products to local market in Nigeria

Nigeria's Dangote oil refinery started supplying petroleum products to the local market on Tuesday, a company executive and fuel marketing associations said, a major step in the country's quest for energy independence.

The refinery, Africa's largest, was built on a peninsula on the outskirts of the commercial capital Lagos at a cost of $20 billion by the continent's richest man Aliko Dangote and was completed after several years of delays.

It can refine up to 650,000 barrels per day (bpd) and will be the largest in Africa and Europe when it reaches full capacity this or next year.

Dangote's group executive, Devakumar Edwin, confirmed shipping of diesel and jet fuel into the local market.

"We have substantial quantities. Products are being evacuated both by sea and road. Ships are lining up one after another to load diesel and aviation jet fuel," Edwin told Reuters.

"Ships load a minimum of 26 million litres, though we try to push for 37 million litres vessels, for ease of operations."

Local oil marketers agreed a price of 1,225 naira ($0.96) per litre of diesel following a bulk purchase agreement, before putting their mark-up, said Abubakar Maigandi, head of the Independent Petroleum Marketers Association of Nigeria.

The association's members control about 150,000 retail stations across Nigeria, Maigandi said.
Another marketers' group, the Depots and Petroleum Products Marketers Association of Nigeria said its members were seeking letters of credit to buy petroleum products from Dangote.

"Our members are discussing with banks and these talks have reached advanced stages, when we have our letters of credit, we will begin lifting products," Femi Adewole, the association's executive secretary said.

The Dangote refinery is touted as the turning point to end Nigeria's reliance on imported petroleum products. Nigeria is Africa's most populous nation and its top oil producer, yet it imports almost all its fuel due to lack of refining capacity. 

By Isaac Anyaogu, Reuters 

Related story: Video - Dangote refinery in Nigeria to import crude from U.S.

 

Video - Nigeria to fast-track construction of $25 billion gas pipeline to Morocco

The Nigeria-Morocco Gas Pipeline spans 5,600 kilometres and will likely shape Africa's energy landscape. Officials hope the pipeline will also become a major gas supplier to Europe.

CGTN

Related story: Possible Trans Niger oil pipeline leak investigated by Shell Nigeria

 

 

 

Video - Dangote refinery in Nigeria to import crude from U.S.

The announcement comes as the Dangote refinery intensifies moves to start pumping out refined products. The facility is targeting an initial processing rate of 350,000 barrels a day before ramping up toward its full capacity.

CGTN

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