Alexgeneration:
Counter his argument of giving one oil well to one modular refinery to produce and sell to their local market.


I'm waiting.

Golan007:


So I as a private producer of oil, rather than sell at the internationally agreed price, would now be forced to sell at a lower price for what reason?

If you owned a business, would you accept it?

Alexgeneration:
What kind of terrible reasoning is this?

You prefer selling the product to outsiders and impoverishing your own people cos you'd make more money?

We have countries buying the farm produce of their farmers, giving them lands,seedlings, fertilizer etc just to make sure the country have food to eat but you'd rather pay subsidies, impoverish your people and sell to foreigners just so you can make money?


With this mindset, this country is doomed.

Golan007:


Simple question:

If you bought a mariginal field for 5 million dollars,
It produces 20k barrels of oil a day and of course requires operating cost of say 1 million dollars a year, would you like to sell your product at the prevailing International rate or would you be ready to lose on your profit (or even loss as that isn't guaranteed) jfor whatever reason?

You want someone who invested millions and even billions of dollars on his project to be selling at a loss whilst the man selling yam can decide whatever price he wants to set for his produce.

And this makes sense to you.

TheGoodJoe:


Where are you people getting this sell at a loss from?

We said Government should channel a fraction of the money they spend on subsidy to prevent the Modular Refinery operators to sell at a loss.

Golan007:


Someone suggested money from some marginal oilfields should be used to subsidise the cost of modular refineries.

The question is simple:

Would you lose your profit or incur more loss for this purpose in any business you do?

TheGoodJoe:


How will the operator of the modular refinery sell at at a loss if he is getting the Crude free? The crude covers the losses and leads to profit.

Golan007:


Simple question:

If you bought a mariginal field for 5 million dollars,
It produces 20k barrels of oil a day and of course requires operating cost of say 1 million dollars a year, would you like to sell your product at the prevailing International rate or would you be ready to lose on your profit (or even loss as that isn't guaranteed) jfor whatever reason?

You want someone who invested millions and even billions of dollars on his project to be selling at a loss whilst the man selling yam can decide whatever price he wants to set for his produce.

And this makes sense to you.

Alexgeneration:

I didn't suggest nor say that private individuals who own oil wells should sell to the modular refineries owners.

I said that the GOVERNMENT should take from THEIR OWN oil well and experiment by giving it to the refineries for one year,at reasonable local prices,let them produce and sell to Nigerians and see how the market forces responds to that.

They can scale up production in a couple of years, the government will save from the subsidy, more jobs for the youths, less insecurity - if it pans out well.

backbencher:


So, the people who drill for the crude should give the crude for free?

That's not possible! That's like telling them that they won't be paid anything for drilling the crude , so that we can have cheap PMS?

How is the crude going to cover the profit?

What you are saying amounts to government telling farmers to give their food crops that they sweated to produce for free to the trader so as to cut costs amd make food cheap. That's not economics!

backbencher:


In essence you are saying that the government should sell oil from its wells at a loss, so as to guarantee cheap fuel?

Yes, I can see the JV partners leaping for joy at that!

You guys want cheap fuel at any cost...even if it means low earnings for the poor Nigerians who do the drilling of oil for you.

Alexgeneration:

I didn't suggest nor say that private individuals who own oil wells should sell to the modular refineries owners.

I said that the GOVERNMENT should take from THEIR OWN oil well and experiment by giving it to the refineries for one year,at reasonable local prices,let them produce and sell to Nigerians and see how the market forces responds to that.

They can scale up production in a couple of years, the government will save from the subsidy, more jobs for the youths, less insecurity - if it pans out well.


P.S Don't bring the argument of "how are we going to pay the crude drillers "? Buhari gave out $1 million to Afghanistan, we could pay the workers from such purse that can dole out that kind of money.

backbencher:


In essence you are saying that the government should sell oil from its wells at a loss, so as to guarantee cheap fuel?

Yes, I can see the JV partners leaping for joy at that!

You guys want cheap fuel at any cost...even if it means low earnings for the poor Nigerians who do the drilling of oil for you.

TheGoodJoe:


What are you arguing?

Let me explain. Those who drill crude, make money from the operations. Serious mega profits.

The modular operators buys these products from the producers/Government.

Someone is suggesting handing operations of some fields to the modular operators and use the profits to support the refining operations.

Keep in mind, this is what Shell planned to do when they set up the Port Harcourt refinery before Government took over the project.

So the point is that the modular refinery operators will not sell at the loss of some drilling fields are used to support their operations.

Golan007:


1 million dollars?



Is that what you are crying over?

Worldwide, Nations support nations despite their own shortages - it is diplomacy.

Alexgeneration:

Afghanistan got $1 million from "poor Nigerians ".

TheGoodJoe:


Operating at a loss is subsidizing.

backbencher:

Okay, we agree on that.



At a price which would be enough for government to make a profit....so that they can have enough to pay production costs, and still have some left over.


Good idea...but, they, must, be allowed to run it at a profit.




And ran the same refinery down by selling fuel from it at a loss, among other things. (Same happened in Venezuela..)




So long as they buy crude at the price the drillers set..ie international price, refine the crude and sell it at a profit...not cheap so as to help the poor, and get paid a subsidy that does not cover the losses adequately.

TheGoodJoe:


First of all, if Shell had run those refineries, Petrol would have been cheap and they would have still made profit.

The refineries failing was just pure sabotage. Not market forces.

The government makes profit from production of Crude, not losses. So channel these profits that you use to subsidize Imported petrol to subsidize local production.

Other countries like Saudi Arabia and co refine crude oil and sell at subsidized prices. Why is ours so different?

Alexgeneration:
Very good that you acknowledged that I'm crying cos of $1 million.

Now,let's channel that sort of "diplomacy " into building infrastructures that will provide jobs and grow the economy.

pongwa:
best time to start repairing our dilapidated refinery but these guys are not smart. Make me president for 6 months and I'll put things to order

backbencher:


Not neciessiarily..unless they had competition which could bring down prices. (A long term effect of subsidy removal)


I don't like to defend the government or NNPC, but when you 1) sell fuel at a loss 2) pay salaries not from the refinery profit, but from subvention to NNPC 3) subdsize so that losses happen instead of profits...sabotage and corruption will result.

Whereas, removing subsides means that refineries have to work very very well, and make profits very very well, otherwise sabotage and corruption would eat into the profits and lead to losses.




Good, and then that means that education, health, sports, transport, roads, railways, etc won't get as much money...plus we already did that in the past and even now. That's part of why we end up with budget deficits...we take money away from other sectors to fund subsidy, which is what this comment states in a nutshell.

And then subsidy costs rises....




Saudi Arabia....10.02 million barrels of crude oil a day. Population 40 million people.

Nigeria: 1.3 million barrels of crude oil a day..Population 200 million people.

Saudi has the money to fund subsidies because they don't have as much people as we do.

backbencher:


Not neciessiarily..unless they had competition which could bring down prices. (A long term effect of subsidy removal)


I don't like to defend the government or NNPC, but when you 1) sell fuel at a loss 2) pay salaries not from the refinery profit, but from subvention to NNPC 3) subdsize so that losses happen instead of profits...sabotage and corruption will result.

Whereas, removing subsides means that refineries have to work very very well, and make profits very very well, otherwise sabotage and corruption would eat into the profits and lead to losses.




Good, and then that means that education, health, sports, transport, roads, railways, etc won't get as much money...plus we already did that in the past and even now. That's part of why we end up with budget deficits...we take money away from other sectors to fund subsidy, which is what this comment states in a nutshell.

And then subsidy costs rises....

Repeat..we already do that, and have been doing that. And because of rising subsidy costs, we have problems....




Saudi Arabia....10.02 million barrels of crude oil a day. Population 40 million people.

Nigeria: 1.3 million barrels of crude oil a day..Population 200 million people.

Saudi has the money to fund subsidies because they don't have as much people as we do.

Golan007:


Which infrastructure?

Just sat you are bitter about something and one would understand.

Golan007:


So I as a private producer of oil, rather than sell at the internationally agreed price, would now be forced to sell at a lower price for what reason?

If you owned a business, would you accept it?

TheGoodJoe:


What are you arguing?

Let me explain. Those who drill crude, make money from the operations. Serious mega profits.

The modular operators buys these products from the producers/Government.

Someone is suggesting handing operations of some fields to the modular operators and use the profits to support the refining operations.

Keep in mind, this is what Shell planned to do when they set up the Port Harcourt refinery before Government took over the project.

So the point is that the modular refinery operators will not sell at the loss of some drilling fields are used to support their operations.

erico2k2:

No one suggested that, what we here said was to use the subsidy money to prop the difference in price so that they can sell local at the approved rate there by bridging the gap in subsidy plus Unclean fuel!

erico2k2:

what if the govt props you with the diff in price??

Golan007:


You mean subsidy?

backbencher:
What the NNPC boss is saying is simple.

Modular refineries can only work when government allows petrol to be sold at market price, otherwise they won't make enough of a profit to function well otherwise.

TruthinAction:


What stops them from fixing our main refineries in the country?

Why can't our government succeed in what they do? Anything they touch dies. This government is cursed. And they are not even ashamed of their failures.

erico2k2:

lets not call it subsidy yet,Im jst asking what if the govt pay the difference