₦airaland Forum

This is a rejoinder to: Petrol Price May Hit N1,800 In Nigeria- Refiners Warn

20% of global oil passes through the Strait of Hormuz. We get it.

But here are the facts:

1. Almost all of Nigeria's crude oil is sweet crude.

2. Dangote Refinery has the capacity to process 650,000 barrels of crude oil per day.

3. Nigeria's daily consumption of crude oil is 327,000 barrels per day (or 52 million liters per day).

4. This means Dangote Refinery can process 100% of Nigeria's daily consumption locally.

So for the defenders of fuel price increase, explain to us why there is fuel price increase at Nigeria's petrol stations.

Before you come with Canada argument, let me preempt you:
Most of Canada’s crude is heavy crude and almost half of the 16 refineries can’t refine heavy crude, so the crude oil needs to be exported to the U.S. for refining. Because it is exported abroad, global oil price will affect it: you export at a high price due to demand, you import at a higher price.

nlfpmod seun these are serious questions

If ships can not pass through the strait then transportation becomes more expensive and supply becomes an issue pushing up the price. Once the price of crude goes up then Nigeria's federal government will gain but consumers of PMS will have to pay more for it. Nigeria will not sell to Dangote or anybody at lower than the international price. They are not even obliged to prioritize Dangote

78% of Nigerians do NOT trust Tinubu’s government.

Poll Has Now Ended. It's very clear where Nigerians stand.

lawani:
If ships can not pass through the strait then transportation becomes more expensive and supply becomes an issue pushing up the price. Once the price of crude goes up then Nigeria's federal government will gain but consumers of PMS will have to pay more for it. Nigeria will not sell to Dangote or anybody at lower than the international price. They are not even obliged to prioritize Dangote

So you mean Nigeria is now making a lot more money to take care of the local needs of Nigerians?

givedemwotowoto:
So you mean Nigeria is now making a lot more money to take care of the local needs of Nigerians?

The government will make more money because they are now selling oil above the budget benchmark. It means it will be easier to pay debts and finance the budget.

But the people will suffer and the looters will spend the gain, that has been the way.

lawani:
The government will make more money because they are now selling oil above the budget benchmark. It means it will be easier to pay debts and finance the budget.

tubolancer:
But the people will suffer and the looters will spend the gain, that has been the way.

Would you prefer the government have no money at all or even less money? Do you think the people will gain as a result of that?

One man's problem is another man's solution, one man's cause of porverty is another man's cause of riches.

To the Nigeria government more money to loot from the sale of crude oil at a high cost, to the average Nigerian time to skip meals, and many falling into multi dimensional porverty.

lawani:
Would you prefer the government have no money at all or even less money? Do you think the people will gain as a result of that?

So the Tinubu-led APC regime’s priority is making more money while the people suffer, and the money isn’t even used judiciously; it gets looted and siphoned.

lawani:
The government will make more money because they are now selling oil above the budget benchmark. It means it will be easier to pay debts and finance the budget.

Nigerians consume only 327,000 barrels daily out of over 1.6 million barrels produced daily, and the government still makes huge profit.

In addition to that, government still has over 1.3 million barrels to sell to the rest of the world at the global oil price and make even bigger profits

Why must the local population pay the price of rising global prices even when their purchasing power is already very low from Tinubu’s policies?

givedemwotowoto:
Nigerians consume only 327,000 barrels daily out of over 1.6 million barrels produced daily, and the government still makes huge profit.

In addition to that, government still has over 1.3 million barrels to sell to the rest of the world at the global oil price and make even bigger profits

Why must the local population pay the price of rising global prices even when their purchasing power is already very low from Tinubu’s policies?

If you are in business, do you sell lower to your friends and family members? Then a large portion of Nigerian crude is already pledged to pay debts. Also, if you sell lower to Dangote, that is going back to subsidy again and I personally don't support that. I believe and hope hostilities in the middle east will soon end because I read American analysts on Quora saying if Iran actually closes the strait of Hormuz then it can't be reopened in less than three to seven years and pms price will at least double

Arghhhh

Iran and Israel should not let Tinubu change it for them

Guy I no no waytin concern Iran with Nigeria oil..

This is the consequence of leaving the entire economy to Dangote

Ordinarily if we have responsible leadership who are not greedy, this shouldn't concern us..

But what do our leaders do.. they sell the crude in advance (how is that even legal?), now those that have the refinery to meet the urgency of now have to import their crude.. because their order request for crude locally is on the queue.

I don't understand how croóked and wićked a leadership can be.. this APC people.

lawani:
If you are in business, do you sell lower to your friends and family members? Then a large portion of Nigerian crude is already pledged to pay debts. Also, if you sell lower to Dangote, that is going back to subsidy again and I personally don't support that. I believe and hope hostilities in the middle east will soon end because I read American analysts on Quora saying if Iran actually closes the straight of Hormuz then it can't be reopened in less than three to seven years and pms price will at least double

If your friends pay you a lot of taxes on their personal and business income, pay VAT for what they buy from your stores, pay multiple taxes and fees for even bank transactions……..

then yes you sell petrol lower to them if they consume only 20% of your crude oil output, if that petrol is one of the most essential things they need in the country to be productive.

This is common sense.

lawani:
The government will make more money because they are now selling oil above the budget benchmark. It means it will be easier to pay debts and finance the budget.

It should be for export or international market. Not for the locals. We are sourcing our crude locally and refining it locally. Unless you are talking about typical business antics to take advantage of any bad news to gain advantage

Dangote said he is also importing crude since NNPC cannot meet his demands. Who dey whine us now?

First, of all the 1.5m bbl we produce daily, govt only owns 60% of it. The companies who invested in oil exploration take 40%. Of the 60% like 30% had been sold by Buhari and those before him. So we basically have like 30% available for govt at all levels to share. Dangote is a private business so govt can't sell to him cheap especially when you consider bunkered Nigerians oil go as far as central African republic.

Unfortunately, this only means more cash for elections and decamping and less for governance. We've had these kind of opportunities in the past and we never made any meaning from it..OBJ sold oil at $145 for months yet we couldn't fix power our manufacturing sector. GEJ sold over $80 for months. Only Buhari with his badluck sold less than $60 for years. This is an opportunity to invest more in production but we won't, every arm of government will insist on sharing the money to steal it.

It's an excuse to exploit Nigerians but PBAT will not allow it

givedemwotowoto:
If your friends pay you a lot of taxes on their personal and business income, pay VAT for what they buy from your stores, pay multiple taxes and fees for even bank transactions……..

then yes you sell petrol lower to them if they consume only 20% of your crude oil output, if that petrol is one of the most essential things they need in the country to be productive.

This is common sense.

It does not help business at all. Business should be separated from all that. No need for subsidies better ask for salary increase

It coming..

It's coming.....
It's coming.....
Government are evil
Nigerians are evil
The people are evil
A day is coming

oluwaseyi0:
Arghhhh

Iran and Israel should not let Tinubu change it for them

I feel you. Dont let your frustration be seen publicly

Nothing Absolutely nothing

I have often wondered about that. We have crude oil and we have Dangote refinery.....we are not importing fuel...oh wait..we still import fuel and the tanker has to pass through the strait of Hormuz.

Does any one knows tinubus username on nairaland, I need to tell him how useless and evil he is for making Nigerians suffer cos he wants to be president,
Seun ban me

Absolutely nothing.

Dangote will be nationalized. It is just a matter of time

Even in Iran where they are fighting, the price of petrol is less than N60 per litre.

What they are doing to Nigerians is evil.

givedemwotowoto:
Nigerians consume only 327,000 barrels daily out of over 1.6 million barrels produced daily, and the government still makes huge profit.

In addition to that, government still has over 1.3 million barrels to sell to the rest of the world at the global oil price and make even bigger profits

Why must the local population pay the price of rising global prices even when their purchasing power is already very low from Tinubu’s policies?

You wey your family wey dey sell local food stuffs dey increase garri price cus of dollars

lawani:
If you are in business, do you sell lower to your friends and family members? Then a large portion of Nigerian crude is already pledged to pay debts. Also, if you sell lower to Dangote, that is going back to subsidy again and I personally don't support that. I believe and hope hostilities in the middle east will soon end because I read American analysts on Quora saying if Iran actually closes the straight of Hormuz then it can't be reopened in less than three to seven years and pms price will at least double

The purpose of government is to provide good governance to the people it govern and not make profit.

The federal government if they had a functional refinery are supposed to set aside a certain amount of crude that will cater for local consumption and has to be lower than what they sell to international markets.

That’s what Russia, Saudi Arabia and some other oil producers do.

callthefred:
First, of all the 1.5m bbl we produce daily, govt only owns 60% of it. The companies who invested in oil exploration take 40%. Of the 60% like 30% had been sold by Buhari and those before him. So we basically have like 30% available for govt at all levels to share. Dangote is a private business so govt can't sell to him cheap especially when you consider bunkered Nigerians oil go as far as central African republic.

Unfortunately, this only means more cash for elections and decamping and less for governance. We've had these kind of opportunities in the past and we never made any meaning from it..OBJ sold oil at $145 for months yet we couldn't fix power our manufacturing sector. GEJ sold over $80 for months. Only Buhari with his badluck sold less than $60 for years. This is an opportunity to invest more in production but we won't, every arm of government will insist on sharing the money to steal it.

Very good analysis, but this government will not do differently from those before it.

*This government has the highest cost of bureaucracy*

They will waste all the money. I am sure BAT is rejoicing somewhere. When he gets to London, you will hear more!!

Dangote's business is refining not exploration. Crude is raw explored oil -- from which several other derivative products are made. Dangote refinery imports most of the crude it refines especially when NNPC stopped selling crude to Dangote.

NNPC is in charge of overseeing oil exploration in Nigeria. Most crude are sourced in the Middle-east and Russia (which augments local supply).

Strait of Hormuz is the most accessible and efficient transportation route for shipping from the East to the West and back. Alternatives for oil are pipelines owned by Saudi Arabia and The UAE but they have limited capacity. The alternative route is really not an alternative.

Now a lot of Nigerians are asking what relationship exist between war in Iran and and petrol price in Nigeria. Here: since Dangote refinery imports crude, a disruption in supply will affect price (excess supply = fall in price, lesser supply = price increase.

If we source all our crude locally (of which we have in abundance) or if Dangote has licence to explore crude, then we may be excluded from the supply shocks and pump-price summersaults.

Disclaimer: I'm not into oil and gas and dont know a lot about the industry. My opinions are purely economics and common sense.