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manny4life:

My question now is, if govt has mandated NNPC to purchase crude @ international prices say $100+ per barrel, how is fuel supposedly to be produced at under N35 as people claim? Like seriously, if NNPC purchases I barrel at $100 = 168 liters supposedly, that is $0.60 per liter (N96 @ 160 exchange rate). The cost of refining, waste etc isn't included, so people, how do you arrive at "fuel is cheap and can be produced under N35 per liter"?

Bottom line, fuel will be cheap only if Nigeria allocates crude to NNPC for a far cheaper price say 1/5th of international price, that way they can refine and sell at low cost if not, I sure don't see it.

The problem is that people put a lot of rubbish information out there and most people are too lazy to actually analyse it for themselves. NNPC has been paying international prices since 2003, yet people still imagine this 'cheap' petrol.

If you give NNPC crude for less than international market prices, what happened before 2003 will continue again - NNPC will leave the refineries in disrepair and divert the crude to be sold internationally and just cream off the difference, which will be lost in the maze of corruption in that organisation.

ImO oil subsidy story is a fraud, check this out without bias

(1) One barrel of Crude oil = 42gallons or
159 litres

, 2) Our Refineries (i.e 4) Installed
(combined) capacity = 445,000
, barrels per day

3) Actual refineries capacity due to
ageing equipment = 30% i.e. 133,500
barrels per day
.
4) . . 133,500 barrels = 21.2 million litres

5)If truly our Local required consumption (F.O.S) =
35millions litres

6) It means that even our MORIBOND
refineries can actually meet over 60% of our local
consumption need of petroleum.

7) The cost structure of crude oil (i.e.
Qua Iboe Crude Oil) production;
- Findings / development - $3.5
- Production cost - $1.5
- Refining Cost - $12.6
- Pipeline/transportation - $1.5
- Distr/bridging fund Margin -$15.69

True cost of one litre of petroleum
anywhere in Nigeria;
- Total sum cost = $34.8
- 1ltr cost = $34.8/159 litres = $0.219
- Naira equiv. 0.219xN160= N35.02k
- Add Tax N5 + N35.02 = N40.02

9) Let FGN refute the above composition
and if not, they should tell us how
they came about N65/litre.

10) Locally refined products cannot be
sold at International price.

11) We really do not need FGN SUBSIDY
as there was NONE in the first place.

12) What is LACKING, is the WILL to
enforce LAW ON CORRUPTION.

Actual Analysis was done by Professor Tam David West, former Petroleum Minister.

[b]This is one question that the government has completely evaded in the subsidy discussions - how much does it cost to refine one litre of petrol in Nigeria? Is it equivalent to the price of imported fuel?

A couple of comparisons:

the price of petrol in the UK (removing VAT and Duty) is approximately 53p. Based on a conversion rate of 250 naira to 1 pound, locally refined petrol should cost 132.5 naira.

http://www.petrolprices.com/the-price-of-fuel.html

In the US, the current cost of petrol is roughly 88 cents/litre. Removing tax, (12%), we come up with 77.44 cents/litre. Based on 150 naira to 1 dollar, the price of locally refined petrol should be 116.16 naira.

I suspect the difference between US and UK prices is due to exchange rates as well as different crude prices as well (WTI Crude used in a lot of the US is slightly cheaper than the UK standard Brent Crude)

I do not think Nigerian refining costs from inefficient refineries are significantly lower than foreign refineries, and 77% of the cost of petrol is from the price of crude.

In my opinion, Nigerian refined petrol should be in the range of 120-130 naira per litre taking the average of the two above and considering our inefficient distribution network using road tankers.[/b]


what is this poster saying makes lil sense, if it contains any, for God sake Uk n US import crude so the cost of buying and shiping crude would be included in that price.
are you telling me Nigeria Imports and buys crude from the international market if they wanna supply its own refineries abegiiiii. what kind of economic advantage do we have then if we have the crude in our backyards uhn??

let us wait for them to explain more on this to us. WE NEED AN ANSWER

Niiade:


what is this poster saying makes lil sense, if it contains any, for God sake Uk n US import crude so the cost of buying and shiping crude would be included in that price.
are you telling me Nigeria Imports and buys crude from the international market if they wanna supply its own refineries abegiiiii. what kind of economic advantage do we have then if we have the crude in our backyards uhn??

The UK does not import crude so let's get rid of that falsehood. Besides, the US that imports some of its crude consumption still produces at a lower cost than the UK.

I just bought at NNPC today for N138 per litre and my fuel gauge did not act like it felt the impact of N5000 worth of PMS. . . But I still support subsidy removal!

I believe that the federal government has the capability of repairing and upgrading our old refineries, the government is favouring the so called oil cabals and punıshıng the cıtızens. in 2009, the government had an agreement with Labour, the agreement are as follows, The fixing of all the refineries and building of new ones, regular power supply, and provision of other social infrastructure such as railways and repairs of roads as well as eliminating the corruption associated with supply and distribution of petroleum products in the downstream sector of the oil industry
The government has seen that they cannot cover their coruption, so they decided to remove the subsidy, secondly, if our refinery can be fix, it will serve us because the consuming capacity per day is still lower than producing capacity.

debosky:

The UK does not import crude so let's get rid of that falsehood. Besides, the US that imports some of its crude consumption still produces at a lower cost than the UK.

WOW you mean the UK does not import crude?, You must be day dreaming! I have read your submission in here and I think you are a conny fellow. What you fail to address is the lazy man reasoning that should crude be sold to NNPC, they would divert it to the international market and sell it! Do you realize that the price of crude internationally also includes cost of storage and transportation?

Also, are you aware that the OPEC charter which Nigeria is signatory to demands that every member nation give a percentage of their total capacity for local consumption before selling the excess at international crude price. In Nigeria, this volume amounts to 450,000bpd. This is what NNPC refines in our four refineries and the alleged price paid is another part of the dirty SCAM played out on the Nigerian masses by the FG controlled cabals.

Britain is now importing only the tiniest fraction of its oil from the Middle East, sourcing its crude instead from the Americas, Africa and Norway, according to intriguing new Government figures.
An analysis by experts at the Department for Business Enterprise and Regulatory Reform (formerly the Department for Trade and Industry), reveals how dramatically the map of UK oil sources has changed over the past half-century, with almost three-quarters of UK oil coming produced from Norway.

This shows that UK imports oil, please, before you post anything on public, investigate your post.

luckern:

Britain is now importing only the tiniest fraction of its oil from the Middle East, sourcing its crude instead from the Americas, Africa and Norway, according to intriguing new Government figures.
An analysis by experts at the Department for Business Enterprise and Regulatory Reform (formerly the Department for Trade and Industry), reveals how dramatically the map of UK oil sources has changed over the past half-century, with almost three-quarters of UK oil coming produced from Norway.

This shows that UK imports oil, please, before you post anything on public, investigate your post.

Leave ignoramus to continue to wallow in their st.upidity!, Who does nt know that the North Sea is getting drier by the day

What I meant to say is that the Uk was (until recently) a net EXPORTER of crude oil.

Even Nigeria imports heavy crude for refining in the Kaduna refinery, but you wouldn't casually call
nigeria an oil importer.

Back to the analysis, any oil bought for local refining in the uk is paid for at international rates. The analysis is therefore valid even when the minor shipping costs for a fraction of Uk refined products that comes from imported products.

@debosky

I believe we can refine 450K bpd in Nigeria going by the capacity of those four refineries, with all four refineries working at maximum capacity, we will have more than enough for local consumption and will be able to export. We need someone to give us a breakdown of the constituents of a barrel of oil as itemised below.

PMS ========>

Diesel========>

Kerosine======>

Cooking Gas====>

Aviation Fuel====>

Others========>

I believe the other constituents can subsidize the cost of PMS.

Simple Computation for derived constituents of a barrel of oil and prices


PMS ========> 19.65 Gallons or 70 liters@ 141 = $64 @ 155Naira to the dollar

Diesel========> 10.03 Gallons or 38 liters@165 = $40 @ 155 Naira to the dollar

Aviation Fuel====>4.07 Gallons or 16 liters@170 = $16 @ 155 Naira to the dollar

Others========>8.25 Gallons or 32 liters@250 = $51 @ 155 to the dollar

GRAND TOTAL made from a barrel of = $181

Crude Oil price====> $110 + total cost of refining including profit = $143

From the above, locally refined products can be made cheaper even if crude is sold at internantional market rates, please note that the cost of Others is on the conservative side as we all buy our lubricating oil at over #900 per liter for the cheapest and #2500 for the very good ones (Mobil One for instance).