Three refineries produced 44m litres of petrol in July

Despite the efforts to increase local refining capacity to conserve foreign exchange Nigeria’s three refineries could only produce 43,743,273 million litres of petrol in July.
This means, the country’s forex request for imports of petroleum products, which currently stands at 35 percent will further increase in the coming months, unless something drastic was done about the state of the refineries
The refineries located in Port Harcourt, Warri and Kaduna, has a combined daily refining capacity of 445,000 barrels of crude oil per day
The latest production statistics contained in the Nigerian National Petroleum Corporation (NNPC), monthly report for July 2016, released at the weekend show that the approximatly only 44 million litres of petrol was produced in July is was far below the 211,562,865 million litres of petrol produced by the three refineries in June this year and slightly above the country’s daily consumption figure of 40 million litres.
The negative trend recorded for petrol production amongst the three refineries was equally replicated for kerosene with July production standing at 22,953,014 as against 119,582,848 produced in June this year.
The petroleum products-petrol and kerosene production by the domestic refineries in July 2016 amounted to 66.70 million litres compared to 331.15 million litres in June 2016. But, the NNPC said the the adverse performance was due to crude pipeline vandalism in the Niger Delta region coupled with on-going refineries revamp; it however, adding that the three refineries continued to operate at minimal capacity.
On capacity utilization of the refineries, NNPC disclosed that total crude processed by the three local refineries for the month of July 2016 was 126,756 metric tones(MT),translating to   929,275 barrels and intermediate of 40,640 metric tones about 297,972 barrels which translates to a combined yield efficiency of 77.82 percent compared to 225,770 metric tones of crude processed in June 2016 with a combined yield efficiency of 80.39 percent.
The report stated further that the three refineries produced  139,284 metric tones of finished petroleum products for the month of July 2016, out of 126,756 metric tones of crude processed and intermediate of 40,640 metric tones at a combined capacity utilization of 6.74 percent compared to 12.40 percent combined capacity utilization achieved in the month of June 2016.
It noted that the nation’s crude oil grades, including Bonny Light, Forcados, Brass and Qua Iboe, had been under periods of force majeure, which had negatively impacted on the targeted oil production of 2.2 million bpd in the 2016 national budget.
“The activities of pipeline vandals and oil thieves are taking a heavy toll on operations of the oil and gas industry, with over 500,000bopd lost as of May 2016. In June 2016, there was additional shut-in of about 50,000bopd as a result of sabotage/attack on the delivery pipelines to the Escravos Terminal.
“At the Forcados Terminal, about 300,000bopd remained shut-in and cargoes were deferred until repairs are completed. The force majeure declared on May 10, 2016 for repair works on the Nembe Creek Trunk Line and the resultant shut-in of about 275,000bopd subsists.”

Market Fundamentals Still Support N135-N145 Pump Price, Says PPPRA, Marketers

The Petroleum Products Pricing Regulatory Agency (PPPRA) and key oil marketers in Nigeria’s downstream petroleum sector have said that the current fundamentals guiding the importation and sale of petrol in the country were still favourable for petrol to be sold within the government-approved pump prices of N135 to N145 per litre.

The PPPRA and marketers which include the Nigerian National Petroleum Corporation (NNPC), Major Oil Marketers Association of Nigeria (MOMAN), and Depot and Petroleum Products Marketers Association (DAPPMA) stated this after an emergency meeting with the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu in Abuja.

The meeting, according to a statement from PPPRA, was convened by Kachikwu as a response to recent news of a possible increase in the pump price of Premium Motor Spirit (PMS).

It was attended by the Group Managing Director of the NNPC, Dr. Maikanti Baru, the Acting Executive Secretary of PPPRA, Mrs. Sotonye Iyoyo, the Acting Executive Secretary of Petroleum Equalisation Fund (PEF), Ahmed Bobboi, as well as the Executive Secretary of MOMAN, Obafemi Olawore, and the Executive Secretary of DAPPMA, Olufemi Adewole.

The statement was however signed by the trio of Iyoyo, Olawore and Adewole, and it stated: “The meeting reviewed the state of the downstream sub-sector, especially as it relates to products supply, distribution, pricing and FOREX sourcing. The meeting also reviewed recent concerns expressed at certain quarters, on the sustainability of the current PMS price band.”

“After exhaustive deliberations, stakeholders present were in the affirmative that the speculations of an imminent upward price review of PMS was unfounded. This position is premised upon the fact that the current market fundamentals, as captured on the PPPRA pricing template for PMS, confirmed that the market is operating within the existing price band of N135-N145 per litre.

“The claim is therefore both unfounded and deceptive, as there is no basis for pricing speculations as being circulated within the last few days,” it added.

The PPPRA from this, assured that the country will continue to have an uninterrupted supply and distribution of petroleum products.

It said the promise was in line with its overall goal of facilitating a vibrant and robust downstream sector, and that Kachikwu has also assured of the federal government’s continued commitment to the welfare and well-being of all Nigerians.

Former Group Managing Directors of the NNPC had last Saturday stated that the that the price cap of N145/litre on petrol was not consistent with the liberalisation policy of the government especially with the foreign exchange rate and other price determining components such as crude cost, Nigerian Ports Authority (NPA) charges, remaining uncapped. They thus suggested that the government’s cap on pump price be taken off to allow for market parity.

Nigerian government rejects call to increase fuel price

The Nigerian government will not increase the pump price of petrol despite a demand that it should do so, officials have said.

The forum of former Group Managing Directors of the Nigerian National Petroleum Corporation, NNPC, on Sunday called for the price increase by calling for a removal of price cap in the pricing template.

A removal of the price cap would mean that marketers would be free to sell petrol at their desired price, based on several factors such as the exchange rate and international crude price. With the Naira exchange rate going down by over 50 per cent to about N412 since the current petrol price was fixed, approving the recommendation would have meant Nigerians pay more for petrol.

The Nigerian government through the Petroleum Products Pricing Regulatory Agency, PPPRA, however, said on Monday that it will not accept the advice.

The former GMDs had in a 12-point communiqué at the end their meeting with the incumbent GMD of the NNPC, Maikanti Baru, said the price cap of N145 per litre of petrol was “not congruent with the liberalization policy.”

The removal of the cap under a liberalised market environment would allow marketers of petroleum products to sell products at any price to enable them recover cost.

The Forum said the current ceiling price of N145 per litre did not factor the current foreign exchange (FOREX) rate and other price components of the pricing template, like crude oil cost and Nigerian Ports Authority (NPA) charges, which remain uncapped.

While stating the government’s response, the acting Executive Secretary of PPPRA, Sotonye Iyoyo, said the proposal was the personal opinion of the former state oil chiefs.

“If it was a recommendation, that is what it is – a personal opinion. I’m not aware government is planning any fuel price increase. We are in a liberalised market already,” she told PREMIUM TIMES.

The spokesperson of the NNPC, Garba Deen Mohammed, also described the advice as an “opinion.”

“The forum was expressing its opinion, which it is entitled to,” Mr. Mohammed reported. “NNPC is a player in the petroleum industry and has a right to have its views about the industry. Nobody is bound by the opinion.”

In the communiqué, the forum also asked the federal government to include funding of joint venture operations as first line charge to guarantee sustainable oil and gas production and national reserve growth.

The industry has, for years, been contending with challenges of dwindling investments to grow production and national reserves, due to inability of government to meet its funding obligations to the joint venture regularly.

The meeting also reviewed issues affecting operations of the oil and gas industry as well as recommendations to resolve them.

The issues include the insecurity in the Niger Delta, NNPC’s poor corporate reputation, poor state of the country’s refineries, current state of petroleum products supply pricing template, and need to focus attention on the Chad Basin in the ongoing frontier oil exploration activities in the northern part of the country.

Other issues include operations of the National Petroleum Investments Management Services, NAPIMS; Petroleum Industry Bill, PIB; NNPC’s relationship with its partners; NNPC’s dwindling revenue base and rising debt profile as well as its widening pension funding gap.

During the meeting, Mr. Baru presented the status of NNPC’s finances and the state of the oil and gas industry, spanning his management’s 12 business focus areas towards restoring the corporation on the path of growth and profitability.

In its review of the current state of industry and ways to resolve issues militating against its progress, the meeting was concerned about declining production levels and the consequences on the country’s revenue.

On insecurity, the meeting noted the threat to oil production and damage to the Niger Delta environment. It said there was need for government and security agencies to refocus their engagements with the various host communities to build sustainable partnership toward a lasting solution to the problem.

The former GMDs urged government to ensure the refineries were refurbished using the Original Equipment Manufacturers (OEMs), while their operations were restructured as Incorporated Joint ventures (IJV) modelled after the Nigerian Liquefied Natural Gas (NLNG), with credible technical and financial partners.

The meeting also asked the government to ignore the proposal in the draft PIB for an NNPC investment subsidiary, NAPIMS, to be removed from the state oil firm. it said that would inhibit its effective function as a national oil company in comparison with its peers in other countries.

On its dwindling revenue base, the former GMDs said they were concerned with the situation and called for particular attention to be focussed on revenue generating entities – the Nigerian Petroleum Development Company, the retail arm, and the refineries – to restore its growth and profitability.

Worried by the high level of NNPC’s debt profile, the former oil chiefs urged its management to urgently ascertain its true financial status and immediately decide on the most appropriate capitalization model.

“If the current situation remains unchecked, it could lead to the crippling of the corporation and the nation’s oil & gas sector, the mainstay of the Nigerian economy,” they said.

FG announces Fuel Subsidy removal, petrol to now sell for N145 per litre

 

The fuel subsidy removal was announced on Wednesday, May 11, 2016.

The government had hinted on Tuesday, May 10, that it would announce new policy on fuel subsidy today.

While preparing Nigerians for the hardship ahead, Vice President Yemi Osinbajo had said that the government would have to take tough decisions on the desirability of retaining fuel subsidies, adding that it had become necessary to remove them.

“No matter how we slice it, we are in economic times that are challenging, but they provide us with some of the best opportunities for making a real difference in our economic life.

“I think that we are at a point that a lot has been said about subsidies and what to do with subsidies. I think we are at a point where we must make many difficult decisions and make very tough choices.

“But I think the Nigerian people are prepared for all what is required and all it would take to make a real difference," Osinbajo, who spoke at the third Ogun State Investors’ Forum held in Abeokuta on Tuesday, said.

However, details of the subsidy removal are still not clear enough.