Nigeria’s fuel subsidy removal is affecting refineries far away in Europe and threatening to squeeze European refiners, Reuters reports.

The average monthly West African (WAF) gasoline imports fell by 56 per cent in the second quarter compared with the first, according to Refinitiv Eikon data.

North America and West Africa, with Nigeria at the top, historically have been the top two destinations for petrol exports from Europe (which produces more petrol than it uses), Reuters reported.

So far, benchmark profit margins for gasoline in northwestern Europe have hovered at around $27 a barrel, Reuters said, citing Refinitiv Eikon data.

“They have been supported by demand from North America, a shortage of high-quality blending materials, disruption caused by low water levels inland and local refinery outages,” the report reads.

“But analysts say the reduction of flows following the upheaval in Nigeria will increase pressure on European refiners, and any winners are likely to be newer Middle Eastern refineries.”

At the end of May, President Bola Tinubu announced that the petrol subsidy regime was over.

Petrol demand in response fell by 35 per cent, according to the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).

According to Jeremy Parker of the CITAC consultancy, which focuses on Africa’s downstream energy industry, onshore petrol reserves in Nigeria have increased to 960,000 tonnes from an average of 613,000 tonnes between January and June, signalling a decline in demand.

“Meanwhile, the black market for smuggled subsidised Nigerian fuel in Togo and neighbouring Benin and Cameroon has collapsed, further reducing demand for shipments via Nigeria,” Reuters said.

“There is no reliable data on how much fuel was smuggled out of Nigeria under the subsidy regime, but a comparison of estimates from official and independent sources indicate more than a third of petrol could have left state oil firm NNPC’s depots every day to be sold illegally abroad.

“Without the subsidy, the financial incentive for smuggling disappears.”

“The key point is that demand from West Africa is drying up,” Reuters quoted Raj Rajendran, Refinitiv lead oil analyst, as saying.

Nigeria, Africa’s largest crude oil producer, relies heavily on imports because of its inadequate domestic refining capacity.

“Imports, however, are increasingly unaffordable as Nigeria’s naira has weakened to record lows since the central bank removed currency restrictions in June. At the same time, inflation is near two-decade highs,” Reuters said.

“The huge, much-delayed Dangote refinery was designed to address the domestic supply shortfall, but full 650,000 barrel per day production is unlikely before the second quarter of 2025, CITAC estimates.”

Regardless, it is possible that the demand for petrol would not fully recover in the country, Analysts told Reuters.

Recall that the NMDPRA said the volume of Premium Motor Spirit, popularly called petrol, consumed across the country in the first half of 2023 was 11.26 billion litres, with consumption reducing by an average of about 18.5 million litres daily in June, after the removal of subsidy on petrol, following the pronouncement by President Bola Tinubu on May 29, 2023.

Data from the Authority showed that between January 1 and May 28, 2023, which was the pre-deregulation period, the total amount of petrol consumed nationwide was about 9.9 billion litres.

The average consumption for the 148-day period was put at 66.9 million litres, indicating the country consumed an average of 66.9 million litres of petrol daily during the five-month period when subsidy on petrol was still in place.

But figures from the NMDPRA indicated that between June 1 to June 28, 2023, which was described as the post-deregulation period, the total petrol consumption across the country was 1.36 billion litres, while the average daily consumption was put at 48.43 million litres.

An analysis of the data showed that the difference between the average monthly consumption figures during the pre-deregulation and post-deregulation periods was about 18.5 million litres.

This implies that the average daily consumption of petrol across the country reduced by about 18.5 million litres after subsidy on the commodity was stopped by the federal government.

It was, however, observed that petrol consumption rose above 100 million litres in some days, while it fell to below 10 million litres in a few other days.

A random pick of petrol consumption figures contained in the NMDPRA report, for instance, showed that on March 8, April 20, and May 16, Nigerians consumed 103.6 million litres, 105.02 million litres, and 101.9 million litres respectively.

These were during the ore-deregulation days, as figures from the post-deregulation period indicated that the country never consumed beyond 78.84 million litres all through the 28-day period captured in the document.

The 78.84 million litres was consumed on June 20, and it was the highest consumption figure during the post-deregulation period, while the lowest figure during the same period was the 470,000 litres that was consumed nationwide on June 11.

https://leadership.ng/nigerias-petrol-demand-from-european-refineries-shrink-on-subsidy-removal/

Nlfpmod

Let it shrink... Wonder what will happen when dangote refinery start working

Chai..


So it's Nigeria that is sustaining the fuel use of the entire Europe and some African countries?

Nigeria must be a very fat ass Lady!

ijustdey:



https://leadership.ng/nigerias-petrol-demand-from-european-refineries-shrink-on-subsidy-removal/

Nlfpmod

Them never start... They're the reason we're still struggling with refining our oil! They've influenced our government to the level that we can't refine our oil. Imagine Dangote who promised to start production by July coming to say that he'll import and shifted the production date ahead, na there you go fear Europe. Shell and other European oil companies have been in Nigeria for decades and yet we still can't refine a single oil because they know how their economy will suffer if we got freed from their cobwebs. There are over 2000 minerals gotten from crude oil but Nigeria only imports about 1.4% of the entire minerals gotten from our own crude and still pay subsidy on top which means these Europeans are stealing from us.

Squeeze them more
Enemies pretending to be friends
Africa your time has come

Could it be that this European refineries in collaboration with some bad elements in Nigeria to jeopardize the chances of making any refinery work. Most of these evil politicians have built/bought or invested heavily in refineries outside Nigeria. They now resale back to Nigeria and chop subsidy money

Now that we are saving Billions from subsidy removal, I want to see the following revolutions in Nigeria:

Minimum wage
Power
Agriculture
Industrial
Infrastructure
Education


All the above sectors must be better before the end of this government First term, we shall hold the President accountable on every single one of his promises, failure is not an option.

So this guy's are feeding fat on Nigeria's fuel subsidized money...this things is like a long chain criminal activities

I Love Bola Ahmed Tinubu. If you hate him then you are an enemy of the state