Video - Nigeria’s state-owned oil company increases oil prices by 11 percent

Citing the higher cost of purchasing oil from the Dangote refinery, the state-owned oil company has raised prices, with rates in Lagos rising to 950 Naira per liter (approximately 58 U.S. cents). But despite this price hike challenge, the new refinery may also address long-standing issues of fuel shortages and long queues at pumps.

CGTN

Video - Nigerian farming community loses crop due to toxic emissions from oil refinery

Environmental regulators linked the issues to a hydrogen chloride leak at a refinery in Kaduna State. They added it could take between 5 to 10 years to reverse the effects of the acid released into the soil.

CGTN

NNPC raises petrol prices again as Dangote fuel hits market

Nigerian state oil firm NNPC Ltd on Monday increased the price of petrol by 11%, the second increase in two weeks and a day after it started purchasing the fuel from the giant Dangote oil refinery on the outskirts of Lagos.

Nigeria expects the 650,000 barrels per day refinery to end years of imports of gasoline, which had been subsidised for decades until President Bola Tinubu began removing support when he took office in May last year.

The price of gasoline is a sensitive issue in Nigeria because many households and small businesses use it to power generators because the majority of citizens are not connected to the national electricity grid.

On Monday, NNPC said it had increased gasoline prices from 858 naira ($0.53) a litre to 950 naira in Lagos and as high as 1,019 naira in northeastern states. It said it buys the product at 898 naira per litre from the refinery.

NNPC said it had started buying the fuel from Dangote on Sunday in U.S. dollars and that a deal to purchase gasoline in the local naira currency was still to take effect.

The latest increase is likely to add to public anger as Nigerians are already struggling with inflation of 33.4%, which has driven up transport costs and caused a cost of living crisis that led to violent protests in early August.

On Friday, a Nigerian presidential committee announced that NNPC would distribute gasoline from the $20 billion Dangote refinery to the local market, ending a deadlock that had stalled distribution.

From October NNPC will supply 385,000 barrels of crude per day to be paid for in naira by Dangote refinery, which will in turn sell its fuel in the local currency.

By Camillus Eboh, Reuters

Nigeria Plans To Block Oil Smuggling Routes

A new plan has been proposed by key security Agencies to protect the country’s oil and gas industry through tightening border controls and improving security around petroleum products conveyors.

Part of the plan would see the establishment of a centre for linkages and collaboration, bringing together all relevant stakeholders for improved information sharing and joint operations to combat smuggling more effectively.

This is part of agreement reached in a meeting held by the Nigeria Customs Service, the Nigerian National Petroleum Corporation Limited (NNPCL) and the Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) at the instance of the National Security Adviser (NSA).

The new plan would also explore the adoption of advanced technologies to enhance monitoring and control of petroleum product movement throughout the supply chain.

Prosecuting offenders and significant penalties to offenders would be applied under the current arrangement.

A communiqué jointly signed by the National Security Adviser, NCS, NMDPRA, NNPCL and the Independent Petroleum Marketers Association of Nigeria (IPMAN) among others, after a stakeholder meeting on petroleum product smuggling held on Monday affirmed agreement to that effect.

The meeting resolved to launch a comprehensive public awareness campaign to educate Nigerians on the detrimental effects of petroleum smuggling on the nation’s economy and security.

“This campaign would be a joint effort of all participating agencies, leveraging various media platforms to reach all segments of society.

“The NNPC Ltd. and NMDPRA, in collaboration with the NCS, agreed to explore the adoption of advanced technologies to enhance monitoring and control of petroleum product movement throughout the supply chain.” the communique read.

It added that the stakeholders at the gathering publicly disassociated themselves from smuggling activities and committed to implementing stricter internal controls even as they agreed to cooperate fully with the NCS and other agencies in identifying and reporting suspected smuggling activities.

The communiqué also disclosed that a formal mechanism was established for regular feedback from stakeholders on anti-smuggling efforts.

This includes periodic review meetings of the operation, with participation from all relevant agencies and associations, it stated.

They also called on the need to support Operation Whirlwind, for stronger collaboration between the service, NMDPRA, NNPC, and other security agencies.

“The meeting acknowledged the significant costs associated with anti-smuggling operations. A resolution was passed to advocate for increased budgetary allocation for Operation Whirlwind, with support from all participating agencies.

“The Operation Whirlwind team, with support from other agencies, will develop a strategy to actively engage community leaders in border areas as partners in the fight against smuggling,” the communiqué stated.

They also agreed that the NSA would work with relevant government bodies to implement existing laws, aiming to strengthen penalties for smuggling and provide greater legal backing for anti-smuggling operations, ‘the forum encouraged NCS to prosecute offenders.’

The communiqué added that the service would collaborate with NMDPRA and NNPC Ltd to develop a long-term, sustainable strategy for combating petroleum smuggling, adding that the platform would be reviewed and updated annually under the supervision of the NSA.

The communiqué also stated that a joint monitoring team, comprising representatives from all participating agencies and associations, was established to monitor the implementation of these resolutions and to provide periodic progress reports to the NSA.

“The meeting concluded with a renewed commitment from all parties to work collaboratively towards eliminating petroleum smuggling and ensuring the integrity of Nigeria’s petroleum supply chain,”.

By Chika Izuora, Leadership

Related story: Army destroys illegal refineries in Nigeria, seizes crude oil

More than 50 killed in Nigeria fuel tanker crash

At least 50 people have been killed in central Nigeria's Niger state, after a fuel tanker collided with a lorry carrying passengers and cattle, the country's disaster agency said.

The Niger State Emergency Management Agency said the collision happened at about 00:30 local time on Sunday (23:30 GMT Saturday), and caused an explosion which engulfed both vehicles.

Director-general of the agency, Abdullahi Baba-arah, said response teams were dispatched to the scene to manage the situation.

A number of other vehicles were also caught up in the explosion.

Footage taken from the scene shortly after the incident shows the two vehicles, which have been entirely burnt out, as well as a number of dead cattle.

Speaking to the Reuters news agency after the incident, an emergency rescue worker said they were attempting to recover bodies, as well as dead animals which were still inside the vehicle.

Emergency agency spokesperson Hussain Ibrahim told the BBC that funerals took place for the victims on Sunday.

“We had a mass burial for 52 people yesterday and we have eight people receiving treatment at the hospital," he said.

“This without doubt is the worst accident we have recorded in many years.”

He added that the Niger state government is footing the hospital bill for those injured.

Governor Umaru Bago said he was “pained by the unfortunate incident” in a condolence message to the families of the victims.

Fuel tanker explosions and accidents are common in Nigeria, partly due to the poor state of roads.

By Michael Sheils McNamee & Mansur Abubakar, BBC

Related story: Video - 20 people feared dead following tanker explosion in Nigeria

Nigeria’s Bid to End Fuel Subsidy Comes at Good Time for Dangote

With petrol scarce and his fuel tank on red, taxi driver Victor Ovundah queued overnight at a gas station in Port Harcourt, Nigeria and by morning was getting close to filling up when sales suddenly stopped.

A man started going from pump to pump, tapping on each console. The digital dashboard flashed: 897 naira ($0.56) per litre. The 34,000 naira needed to fill up his Toyota Corolla moments before was now 50,000 naira. A 45% increase in the blink of an eye.

“Our WhatsApp group for Bolt drivers was blowing up with complaints, it seemed the price change was well planned,” he said. “How are we supposed to make a profit with this new fuel price?”

Public frustration is just one consequence for Nigeria as it once again tries to end a costly addiction to fuel subsidies.

The move could fan inflation and risks re-igniting cost-of-living protests. But it may wean the country off a reliance on imported gasoline, which cost it around $10 billion in 2022, just as the local refinery of billionaire Aliko Dangote starts to deliver a home-grown product.


It also gives the West African nation a chance for a do-over in efforts to end the years-long practice of providing cheap fuel.

Can Nigerians Bear Pain of Economic Shock Therapy?: QuickTake

President Bola Tinubu declared subsidies were finished after taking office in May 2023. That decision and other reforms were cheered by observers, including the World Bank and International Monetary Fund. But they jolted inflation to a 28-year high and Tinubu quietly backtracked on fuel to dampen popular protest.

The cost of reintroducing the subsidy was left with the state-owned oil company NNPC Ltd. It’s financial statements show the decision pushed it into heavy debts owed to gasoline importers, who local media reports said have since halted supplies until they get paid.

NNPC declined to comment on whether it was raising gasoline prices, but it acknowledged reports regarding the company’s significant debt to petrol suppliers.

“This financial strain has placed considerable pressure on the company and poses a threat to the sustainability of fuel supply,” it said in a Sept. 1 statement posted on X.

Its 2023 financial statements show fuel subsidies cost the NNPC 3.3 trillion naira between January and May, and 1.8 trillion naira from August, when the grant was reintroduced, to December. It’s also owed 7.8 trillion naira for the seven months to July this year, according to Chief Financial Officer Umar Ajiya.

Those amounts will come out of what it would otherwise pay to the government.

In addition to a fiscal impact, gasoline shortages have led to miles-long queues at gas stations in cities including Abuja and Lagos, the commercial hub, as drivers wait for hours to fill up.

With this week’s price rise, gasoline is closer to a market level, a move welcomed by industry experts because it highlights the harm done by subsidies.

“At least now we know who is bleeding and how it is impacting negatively on the downstream petroleum supply sector,” said Billy Harry, head of an association of fuel station owners.


The price increase could also complicate the central bank’s task as it fights inflation and tries to stabilize the naira. But it creates an opportunity for Dangote, whose massive 650,000 barrel-a-day plant near Lagos is beginning to produce gasoline.

“This will eliminate all fuel queues in Nigeria,” Dangote told Arise News in a Sept. 3 interview. “This will also make sure that there is consistent supply to the market.”

His refinery, which took a decade to bring online, could transform the country’s dependence on gasoline imports, which are paid for in dollars, stoking inflation and draining reserves.

Nigeria’s downstream regulator said in a statement on Tuesday that a deal had been reached to sell crude to the Dangote refinery in naria, easing both the gasoline shortage and pressure on the currency, which has lost around 70% of its value against the dollar since last year.

“The refinery is now poised to supply an initial 25 million litres of gasoline into the domestic market this September and will subsequently increase this amount to 30 million litres daily from October 2024,” the regulator said in a statement on X.

Dangote offers a good opportunity to finally sell gasoline at market prices in Nigeria, said Harry, of the retailers’ association.

“We have seen with the scarcity that people are buying products at black-market prices that sell for much higher. The only way to go is by allowing gasoline to sell at the prevailing market price,” he said.

That sounds good on paper but there are real-world risks of ending fuel subsidies.

Public fury over the high cost of living fanned protests that brought parts of the country to a standstill in early August and led to the death of at least 21 people.

One of the key demands of protesters was for the pump price to fall back to pre-May 2023 levels of 250 naira per liter. They’re preparing for more demonstrations in October, when the nation celebrates independence, but may return to the streets sooner.

Labor unions could also balk at higher pump prices. They agreed to a new minimum monthly wage of 70,000 naira in August after a government promise that petrol prices wouldn’t rise.

“We are filled with a deep sense of betrayal as the federal government clandestinely increases the pump price of gasoline,” Joe Ajaero, President of the Nigeria Labour Congress, said in a statement demanding the increase be reversed.

By Nduka Orjinmo, Bloomberg 

Related story: Nigeria to Allow Aliko Dangote’s Refinery to Set Gasoline Prices

Nigeria to Allow Aliko Dangote’s Refinery to Set Gasoline Prices

Nigeria is considering allowing billionaire Aliko Dangote’s refinery to set the price of the gasoline it sells, people with knowledge of the matter said, a move that’s poised to refashion the government’s control over what customers pay for fuel.

Until now, Africa’s largest oil producer has imported all of its gasoline and subsidized the price at a hefty annual cost. But in a major change, Dangote’s massive plant near the commercial hub Lagos is starting to locally refine gasoline.


Nigeria will allow Dangote to set the price of gasoline to petroleum marketers starting next month, according to officials with knowledge of the matter. They asked not to be identified as they’re not authorized to speak to the media.

State-owned oil company NNPC Ltd. — the sole importer of gasoline — has since August 2023 been reselling the product below market cost to temper prices, after a brief removal of the subsidy pushed up inflation and fanned public protests. This week it lifted the price by 45%, to 897 naira ($0.56) per liter, moving it closer to market prices.

The government said Dangote will be free to set its own price.

“Dangote Refinery will certainly not sell their products below market value as a business that was set up to make profit,” said government spokesman Temitope Ajayi. “I don’t see how NNPC or the federal government will control price for a private business,” he said.

The role of the petroleum industry regulator “will be to ensure products quality and fair pricing so that the business doesn’t take undue advantage of the citizens or rip them off,” Ajayi said.

The changes occur amid severe gasoline shortages in major Nigerian cities after debts incurred by NNPC, in part due to the subsidy, disrupted its ability to supply gasoline. It said it is owed 7.8 trillion naira ($4.9 billion) by the government in subsidy debts for the seven months to July.

Going forward, petrol marketers will be allowed to buy products directly from the Dangote Refinery, the people said. A spokesperson from Dangote Industries didn’t immediately respond to requests for comment.

The facility at full rates is expected to be able to produce about 330,000 barrels a day of gasoline, according to Randy Hurburun, senior refinery analyst at consultancy Energy Aspects Ltd. That’s more than 1% of global demand for the road fuel, which is about 27 million barrels a day. It’s more than enough to meet the UK’s entire requirement.

By Ruth Olurounbi, Bloomberg

Related story: Dangote Refinery begins petrol production, vows to ease Nigeria’s fuel crisis

Gridlock in Nigeria amid fuel shortages and price hikes

Nigerians have been hit by a double whammy of chronic fuel shortages and a hike in prices by the state-owned oil company.

The Nigerian National Petroleum Corporation (NNPC), which imports the country’s fuel and distributes it to private sellers, blamed its debts and rising global prices for its difficulty in getting fuel.

Many people have been left stranded with long queues at petrol stations nationwide. Commuters in Lagos have been lining up at bus stations, but there very few buses operating.

Others told the BBC they have been forced to trek long distances as public transport prices have doubled along some routes.

On Tuesday, the NNPC said it was putting up the petrol price from 617 naira ($0.40, £0.30) to 897 naira a litre.

Its petrol stations have the cheapest fuel on sale in the country - but at the vast majority of other private garages the pump price is much higher.

When the NNPC puts up the price, so do private sellers and in some states, like Oyo, Kano and Kaduna, petrol is now selling for as much as 1,200 naira a litre.

Many garages around the country have shut because they have run out of fuel, others have closed to adjust their prices.

In the capital, Abuja, most are open but all have long queues as desperate drivers wait their turn - some slept in their cars overnight.

Fuel stations are not rationing supply, so there is a danger their wait will be futile.

A motorcycle rider in Kano, the main trading hub of northern Nigeria, said it was frustrating: “Most of the fuel stations here in Kano are closed because they want to adjust their pumps to the new price.

“I was able to get fuel at 950 naira at a particular station, but other places have already started selling at 1,200 per litre,” Aminu Danyaro told the BBC.

Black-market traders, who buy fuel from petrol stations and sell it by the roadside from jerrycans at inflated prices, are doing a brisk trade in Kano, where there is significantly less traffic than usual.

The Nigeria Labour Congress (NLC) - the country’s main trade union body - says it feels “betrayed”, explaining that the reason it accepted the new minimum monthly wage of 70,000 naira ($44, £34) in July was because there was an agreement with the government that petrol price would not be increased.

When President Bola Tinubu came to power last year, he shocked Nigerians on his first day by removing a subsidy that kept the price of fuel low.

This - amongst other policies - has led to the worst economic crisis in a generation and cost-of-living protests, dubbed “10 days of rage”, were held countrywide last month.

Nigerians are now pinning their hopes on the new privately owned Dangote Petroleum Refinery, which has been built by one of Africa’s richest man, Aliko Dangote.

On Monday, it was announced with great fanfare that the refinery had just started producing petrol - a milestone in Nigeria which despite being Africa’s largest producer of crude oil imports all its refined fuel.

But it is not clear how long Nigerians will have to wait to see ready availability of petrol or a drop in prices.

By Yūsuf Akínpẹ̀lú, BBC

Dangote Refinery begins petrol production, vows to ease Nigeria’s fuel crisis

The Dangote Refinery, a $20 billion project spearheaded by billionaire Aliko Dangote, has officially begun petrol production, marking a significant milestone in Nigeria’s energy sector.

This development is expected to alleviate the ongoing petrol scarcity that has gripped the nation, offering much-needed relief to millions of Nigerians.

“This refinery will fuel growth, development, and prosperity by supplying energy to our people,” said Aliko Dangote, President of the Dangote Group, during a press briefing on Wednesday.

Dangote expressed gratitude to President Bola Tinubu’s administration for fostering an environment conducive to the success of the initiative.

“I salute the people of Nigeria and President Bola Tinubu’s government for creating the conditions that allowed us to achieve this monumental task. This refinery will drive growth, development, and prosperity by providing energy to our people,” Dangote stated.

He also praised Tinubu for the “Naira for crude, Naira for product” initiative, which he believes will stabilise the Naira by reducing the demand for dollars by 40%.

“As we have this refinery working, it will show the true consumption of Nigeria; we can track every loaded truck and ship,” he said.

He added that the refinery is designed to meet the demands of not only Nigerians but also those in sub-Saharan Africa.

Vanguard

Related stories: Dangote Refinery Presents First Petrol Sample

Nigeria's Dangote refinery set to start gasoline output in September

Dangote Refinery Presents First Petrol Sample

Aliko Dangote, President of the Dangote Group has presented the first sample of Premium Motor Spirit, better known as petrol.

He made the presentation on Tuesday in a broadcast at his refinery situated in the Ibeju-Lekki Area of Lagos State.

"I would like to salute the people of Nigeria and the government of President Bola Tinubu for giving us the platform for growth, development, and prosperity. I also want to thank him personally for creating the idea of the Naira for crude. Doing that will give Naira stability.

"As we have this refinery working, it will show the true consumption of Nigeria; we can track every loaded truck and ship," Dangote said

He further disclosed that the refinery is meant to serve not just Nigerians, but also sub-Saharan Africa.

Vanguard 

Related story: Nigeria's Dangote refinery set to start gasoline output in September

 

 

NNPC says its facing financial strain over costly fuel imports

Nigeria's state-oil firm NNPC on Sunday said it is facing financial strain making it unable to import petrol into Africa's most populous nation, that has seen weeks-long fuel scarcity across its retail stations.

The news comes after Nigeria National Petroleum Company Limited (NNPC), the country's sole importer of refined products, in August announced record profits for 2023 but warned that it was covering for shortfalls in government's petrol import bill.

Reuters reported early July that the NNPC's debt to oil traders had surpassed $6 billion, doubling since early April, as the company struggled to cover the gap between fixed pump prices and global fuel costs. The NNPC declined to comment at that time.

It later blamed operational hitches for the long fuel queues.

"This financial strain has placed considerable pressure on the company and poses a threat to the sustainability of fuel supply," NNPC's spokesperson Olufemi Soneye said in a statement late on Sunday.

President Bola Tinubu scrapped a costly but popular subsidy on petrol last year when he took office, to cut government expenditure. But he reintroduced subsidy partly after inflation skyrocketed, worsening a cost of living crisis and stoking tension among the population.

The IMF has said fuel subsidies could cost Nigeria up to 3% of GDP this year as the increases in pump prices have not kept up with their dollar cost.

The West African country expects to likely spend 5.4 trillion naira ($3.7 billion) this year - 50% more than in 2023 - to keep petrol prices fixed, while borrowing to plug gaps in its budget, a draft document had said in June.

"We are actively collaborating with relevant government agencies and other stakeholders to maintain a consistent supply of petroleum products nationwide," the NNPC said. 

By Ope Adetayo, Reuters

Nigeria's Dangote refinery set to start gasoline output in September

Nigeria's 650,000-barrel-per-day Dangote refinery is undergoing test runs for gasoline production, with full operation expected by mid-September, according to a note by industry monitor IIR Energy.

The $20-billion Dangote refinery, built by Africa's richest man, Aliko Dangote, on the outskirts of Lagos, began operations in January after years of delays.

Dangote, which has so far only produced diesel and other distillate fuels, had earlier said that gasoline deliveries from the refinery would start in July. Before that the refinery had aimed to start making the motor fuel by May.

It is possible that there could be further extensions, IIR said in a note to clients.

Emails to Dangote were not delivered and calls did not connect

Once fully operational, the refinery is set to upend the Europe-to-Africa fuel trade and reduce Nigeria's reliance on imported refined products. 

By Shariq Khan, Reuters

Nigeria Owes State Oil Firm $4.9 Billion Fuel-Subsidy Debt

Nigeria owes its state-owned oil company almost half of what it plans to collect in revenues this year for a gasoline subsidy it reintroduced in August.

Nigerian National Petroleum Corp. is owed 7.8 trillion naira ($4.9 billion) by the government in subsidy debts for the seven-months to July, according to NNPC’s Chief Financial Officer Umar Ajiya. The government aims to collect 19.4 trillion naira in revenue this year.

The subsidy that was withdrawn in May last year by Nigeria’s President Bola Tinubu to help repair the state’s finances after debt-service costs jumped to 96% of revenues was reinstated to allow measures to be introduced that could cushion Nigerians from spiraling inflation that’s at 33%.

The government will allow NNPC to offset about 2.2 trillion naira it owes the state against the subsidy debt, Ajiya said in an interview after the company announced its results in Abuja, the capital.

The government accumulated the debt to the NNPC because it is the sole importer of gasoline, which it resells to marketers at below market cost to keep prices low. A liter of fuel sells for about 617 naira at the pump at NNPC retail stations in Lagos, the commercial capital, compared with more than a 1,000 naira in neighboring countries, fueling cross-border smuggling of the product.


The state-oil company recorded an annual profit of 3.3 trillion naira in 2023, compared with 2.55 trillion naira a year earlier. It plans to invest $6.6 billion in its operations this year, which will be largely borrowed, Ajiya said.

It foresees crude and condensates production increasing to 2 million barrels a day by year end from an average of 1.75 million barrels per day in August, helped by improved security to combat oil theft, said Oritsemeyiwa Eyesan, executive vice president of the company’s upstream division. 

By Ruth Olurounbi, Bloomberg

Related story: Video - Nigeria struggles to meet crude oil production targets

Video - Nigeria struggles to meet crude oil production targets

Nigeria's crude oil output in July 2024 rose slightly above 1.3 million barrels per day, up from June's output of 1.28 million. However, this still falls short of the 1.5 million bpd OPEC quota and far below Nigeria's 1.78 million barrels per day budget target for 2024. Lack of infrastructure and expertise, oil theft, and low investments continue to cripple output.

CGTN

Related story: Nigeria Is Turning Into an Oil Market Juggernaut

 

Army destroys illegal refineries in Nigeria, seizes crude oil

The Nigerian army said on Wednesday that it had destroyed at least 27 illicit oil refineries and seized around 100,000 liters (26,400 gallons) of stolen crude oil in a series of raids in the Niger river delta this week.

In a statement, the army said its troops destroyed 23 illegal sites along the Imo River in southeast Nigeria. It described the region as "a renowned hub of criminal activities."

Elsewhere, soldiers from the 16th brigade neutralized four illegal refineries in the Degema region near Port Harcourt.

Army spokesman Danjuma Jonah Danjuma said that, along with the crude oil itself, vehicles, storage tanks and metal drums were also confiscated.

"The confiscated products are being handled appropriately," the lieutenant colonel said, according to Nigeria's Daily Post newspaper.

Major General Jamal Abdussalam, commanding officer of the sixth division, commended his troops for their "renewed disposition to take criminal merchants out of business" and ordered them to "ensure the integrity of the pipelines [is] maintained."

He also called on local community stakeholders to continue to provide information on criminal activities to the security agencies.
 

Nigeria's economy hit by drop in oil supply

Nigeria is Africa's leading energy producer but large-scale oil theft and pipeline sabotage have decreased output in recent years — reducing exports, crippling government finances and posing a serious challenge for President Bola Tinubu.

Just last week, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) said it had only been able to help secure 177,777 barrels per day (bpd) from oil producers in the first six months of the year, despite refineries raising their requirements for the second half of 2024 to 597,700 bpd.

Meanwhile, lawmakers in Lagos are considering new, stricter punishments for "subversive actions" which critics say are aimed at anti-government protesters. However, the proposed regulation could feasibly by applied to oil smugglers, too.

On Wednesday, parliamentarians began debating a Counter Subversion Bill which proposes three-year jail terms for "disobeying constituted authority," five years for erecting "illegal road blocks" and up to ten years for refusal to sing the national anthem.

The new bill comes as a response to nationwide protests against economic reforms which have exacerbated a cost-of-living crisis in Nigeria.

DW

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

Nigeria Is Turning Into an Oil Market Juggernaut

In a finely balanced oil market, Nigeria has suddenly reemerged as a key player.

During the past few weeks, actions by the country’s massive Dangote refinery have moved prices, with purchases of US barrels initially boosting the crude futures curve before a decision to sell them sent oil tumbling.

Once fully operational, the plant outside Lagos will be able to process 650,000 barrels a day, rivaling the largest sites in the US and more than 50% larger than Europe’s biggest refinery.

A look at International Energy Agency data this week shows why that’s so important.

Even if OPEC+ cancels planned supply hikes, there will be a surplus of about 860,000 barrels a day next year. The group currently plans to add 540,000 barrels a day next quarter.

Both figures are close to Dangote-sized swings.

Refinery ramp-ups are complicated, and there’s already been at least one delay. But once the site starts churning out gasoline, it will transform fuel markets in the region and upend long-established trade flows, particularly in Europe, where Nigeria currently purchases much of its supplies.

Aliko Dangote, the billionaire behind the plant, said last month the plan is for it to start producing the fuel in August, though others are doubtful.

“The refinery’s gasoline is unlikely to hit the market until at least September,” consultant FGE wrote this month, citing issues with some of the plant’s units.

Then there’s the question of feedstock.

The facility was built on a dream of Nigeria consuming its own crude. That’s why there was an uproar when Dangote started buying US supplies.

Recently, the country announced plans for its refiners to pay for oil in local currency and to consume as many as 445,000 barrels a day of domestic product. Still, it’s unclear how the latter will happen.

But if it does, that will mean less crude for current buyers, notably in Europe.

It also means that in an oil market focused on war, economic slowdowns and output curbs, Nigeria will be a surprisingly hot topic among traders in coming months.

Alex Longley and Bill Lehane, Bloomberg

Nigeria and Equatorial Guinea sign gas pipeline project

Nigeria and Equatorial Guinea have signed an agreement to establish and operate a gas pipeline, Nigerian presidential spokesperson Ajuri Ngelale said in a statement on Thursday.

Nigerian President Bola Tinubu met with Equato-Guinean President Teodoro Obiang Nguema Mbasogo in the Central African country of Equatorial Guinea during a three-day visit to discuss issues ranging from employment and conflicts to food security among others.

Nigeria and Morocco agreed to build the pipeline in 2016 to promote regional integration and enhance energy security, while offering African gas an export route to Europe

That project, backed by the Economic Community of West African States (ECOWAS), is expected to cost $25 billion and have a capacity of 30 billion cubic meters per year, to be completed in three phases as it links up to existing infrastructure.

The agreement with Equatorial Guinea covers legislative and regulatory measures for the gas pipeline, establishment and operation, transit of natural gas, ownership of the gas pipeline, and general principles.
Mbasogo hailed the deal as being strategic to Africa's development and the continent's bid to have a permanent seat on the United Nation's security council. 

By Felix Onuah, Reuters

Oil output in Nigeria rises on improved security, Navy chief says

Nigeria's oil output has risen to between 1.6 million and 1.7 million barrels per day after the government beefed up security to curb crude theft, Chief of Naval Staff Emmanuel Ikechukwu Ogalla said on Tuesday.

Crude production in Nigeria, a member of the Organization of the Petroleum Exporting Countries (OPEC), stood at 1.2 million barrels per day in February, Ogalla said. Oil major Shell has exited the country.

"We have stepped up surveillance and enforcement in the oil producing areas," the naval chief said.

"Right now, as we speak, the Nigerian Navy has 12 vessels on the sea to protect oil production and stem oil theft. We have arrested over 16 vessels, so far."

Ogalla said the force has blocked channels for the sale of illegally refined petroleum products.

The country's oil minister Heineken Lokpobiri said in May that Nigeria could produce 6 million barrels of oil per day with adequate investment in its energy sector.

He added that Nigeria and other African oil-producing countries lack the capital to explore and produce their oil and gas.

By Camillus Eboh, Reuters

Related story: National oil company in Nigeria declares state of emergency

 

Lawmakers in Nigeria try to resolve rift between authorities and Africa's richest man Aliko Dangote

Nigerian legislators on Monday began an investigation into the alleged importation of contaminated fuel into the country, part of efforts to resolve issues causing a rift between an oil refinery owned by Africa’s richest man Aliko Dangote and the industry regulator.

A legislative committee tasked with carrying out the probe is also looking into allegations of the “indiscriminate issuance of licenses and the alleged unavailability of international standard laboratories” blamed for such contaminated products, its chairman, Ikenga Ugochinyere, said in the capital of Abuja.

The committee called on parties in Nigeria’s petroleum sector to “deescalate tensions” that have been deepened in recent weeks by accusations from the regulator that Dangote was seeking a monopoly in the market and that his refinery’s products are of a low standard.

Nigeria’s junior petroleum minister Heineken Lokpobiri, meanwhile, met with Dangote and officials from the country’s petroleum sector in what he called a “collaborative effort” to address the issues facing the refinery.

“All parties involved demonstrated a strong commitment to proactive problem-solving,” the minister said after the meeting in a post on social media platform X.

The 650,000-barrels-per-day refinery in the economic hub of Lagos is the biggest in Africa and was touted by authorities as a game-changer that would end the oil-rich country’s dependence on imported petrol.

However, the $19 billion facility has been off to a slow start despite opening more than a year ago. It has had to source crude oil from other countries after failing to secure supplies in Nigeria, whose capacity as one of Africa’s biggest oil producers has been impeded by oil theft and chronic corruption.

A senior executive of the refinery has also accused international oil companies in Nigeria of plotting the refinery’s failure. “It is either they are deliberately asking for a ridiculous premium or they simply state that crude is not available,” Devakumar Edwin, a vice-president of Dangote Industries, said of the companies.

The Dangote refinery’s challenges compounded last week when the Nigerian Midstream and Downstream Petroleum Regulatory Authority said its product quality, along with those of other local refineries, was “more inferior” compared to that of imported products.

“Dangote is requesting that we should suspend or stop the importation of all petroleum products … and that is not good for the market because of monopoly,” said Farouk Ahmed, chief executive of the regulatory agency.

Dangote denied both claims and invited lawmakers to inspect the plant where its product was tested. He said he did not receive any incentive from the Nigerian government regarding the refinery. He has also said he was calling off plans to invest in Nigeria’s steel industry.

It is not clear what is the origin of the rift between Nigerian authorities and Dangote, whose companies also dominate markets such as cement and flour. The dispute began after last year's presidential election that was won by President Bola Tinubu who replaced Muhammadu Buhari, a known ally of Dangote, who had completed his tenure as president.

Analysts say such a dispute could send the wrong signal at a time when the country is seeking to ramp up foreign investments and stabilize its ailing economy.

Such allegations about low-quality products from the refinery seem “odd” especially when presented without evidence and in the absence of complaints from consumers, Nigerian economist Bismarck Rewane said, reechoing concerns the claims are only a sign of more deep-rooted issues.

By Chinedu Asadu, AP

Spending on jet fuel importation in Nigeria falls 87% to N31bn

Nigeria’s spending on kerosene type jet fuel importation fell quarter-on-quarter (QoQ) by 87 percent to N31 billion in the first quarter of 2024 (Q1’24) from N239.18 billion in Q4’23.

Meanwhile, according to a report on ‘Foreign Trade in Goods Statistics’ by the National Bureau of Statistics (NBS) for Q1’24, also indicated that the product was among the top traded in West Africa during the period.

Jet A-1 is a kerosene-type fuel compatible with most jet aircraft, both civil and military, helicopter turbine engines, turboprops and compression-ignition piston engines.

Recall that in March 2024, a statement by the Director of Public Relations and Information, AVM. Edward Gabkwet, noted that the Chief of Air Staff, Air Marshal Hassan Abubakar, decried the high costs of fuel prices as well as the introduction of surcharges, while pleading with the National Assembly to permit the Air Force to import Jet A-1 fuel to sustain ongoing air operations.

According to Abubakar, the cost of Jet A-1 was about N1,200 per litre as against the N360 per litre the service budgeted for adding that this issue was affecting the effectiveness of the NAF.

This comes at the backdrop of a shipment of jet fuel to Europe by Dangote Refinery, with stakeholders expecting that in-country distribution would have addressed the issue of high cost of the product in Nigeria.

The inaugural shipment, loaded onto the “Doric Breeze” vessel, departed from the Lekki Free Zone in Lagos on May 27th and is currently en route to Rotterdam, Netherlands, according to S&P Global Commodities at Sea data.

The cargo, containing 45,000 metric tons of jet fuel, was awarded to BP as part of a 120,000-metric-ton tender offered by the refinery. Spanish refiner Cepsa also secured a portion of the tender.

By Elizabeth Adegbesan, Vanguard