All articles in the Downstream Section:

Unusual Spike in Methanol Found in Gasoline in Nigerian Market

Section: Downstream · February 9, 2022 · No comments |

PRESS RELEASE

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (The Authority) wishes to inform the Nigerian public that – limited quantity of Premium Motor Spirit (PMS), commonly known as Petrol, with methanol quantities above Nigeria’s specification was discovered in the supply chain.

Methanol is a regular additive in Petrol and usually blended in an acceptable quantity.

To ensure vehicular and equipment safety, the limited quantity of the impacted product has been isolated and withdrawn from the market, including the loaded trucks in transit Our technical team in conjunction with NNPC Ltd and other industry stakeholders, will continue to monitor and ensure quality petroleum products are adequately supplied and distributed nationwide.

The source supplier has been identified and further commercial and appropriate actions shall be taken by the Authority and NNPC Ltd.

NNPC Ltd and all Oil Marketing Companies have been directed to sustain sufficient distribution of Petrol in all retail outlets nationwide.

Meanwhile, NNPC has intensified efforts at increasing the supply of Petrol into the market in order to bridge any unforeseen supply gap.

Issued by:

Nigerian Midstream and Downstream Petroleum Regulatory Authority (The Authority) 8th February, 2022.

Nigerian Government Will Keep Gasoline Import Subsidy in Place, Beyond July 2022

Section: Downstream · January 24, 2022 · No comments |

The Nigerian government has suspended its plan to remove subsidy on petroleum products in July 2022 as, according to the Minister of Finance, “the timing is problematic”.

Zainab Ahmed said that the Government made provisions for subsidy in the 2022 budget from January to June 2022, and “all payments on fuel subsidy ordinarily would cease as from July, 2022”. She disclosed that efforts are underway by the Executive arm of government to forward a request to the National Assembly to make additional provision for fuel subsidy from July 2022, “till a time deemed appropriate for its eventual removal”. Ahmed, speaking at a meeting which involved Timipre Sylva, Minister of State for Petroleum Resources, Ahmed Lawan, the country’s Senate President, as well as Farouk Ahmed, Chief Executive Officer of the Nigerian Midstream and Downstream Regulatory Authority, Mele Kyari, Managing Director of the Nigerian National Petroleum Corporation, and Gbenga Komolafe Chief Executive Officer of the Nigerian Upstream Regulatory Commission, explained that the provision in the budget to end subsidy by the end of June 2022 was made in deference to the Petroleum Industry Act, passed in August 2021, which includes a provision that all products will be deregulated.

“Subsequent to the passage of the Act, we went back with an amended the Fiscal Framework that was submitted to the National Assembly to incorporate this demand, but after the budget was passed we have had consultations with a number of stakeholders. It became clear that the timing is problematic, that practically there is still heightened inflation, and also removal of subsidy will further worsen the situation, thereby, imposing more difficulties on the citizens, and Mr. President clearly does not want to do that”. She said that “what we have to do now is to continue with the discussions we are making, in terms of putting in place a number of measures, one of which is the deployment of an alternative to the Premium Motor Spirit (PMS) and also the roll out of enhanced refining capacity in the country, including the 650,000 barrels per day Dangote refinery and also the rehabilitation of the four national refineries that have a combined capacity of 450,000 barrels per day”.

Bolloré May Sell African Logistics Assets to MSC

Section: Downstream · December 27, 2021 · No comments |

French logistics group Bolloré has received an offer from the Mediterranean Shipping Company (MSC), a Switzerland based operator in container transport and logistics, to acquire 100% of Bolloré Africa Logistics, comprising of all the Bolloré Group’s transport and logistics activities in Africa, based on an enterprise value, net of minority interests, of €5.7Billion.

Bolloré says it has granted the MSC Group an exclusivity until 31 March 2022 “to submit a put option”. Closing this sale will then require obtaining regulatory authorisations and the approval of the competent competition authorities.

“The Bolloré Group has decided to study this offer, which protects jobs and preserves its projects and commitments on the continent. It remains fully convinced of the potential of Africa, where it will continue to be actively involved in television (Canal+, MultiChoice), communications, entertainment, publishing and as a broadband internet access provider”, the group says in a statement. “The Bolloré Group reaffirms its commitment to invest and expand in the region.

“The two groups share many similarities. MSC is a European family group with a long-term vision that places its employees at the heart of its business strategy.

“The MSC Group has made significant investments in Africa in recent years and has great ambitions for the African continent. Its investment capacity, resources and market expertise would provide a new impetus to the projects that the Bolloré Group has designed, built and developed.

This transaction, if it comes to fruition, will not be completed until several months later*. The satisfaction of the Bolloré Group’s customers and partners remains a priority and, therefore, Bolloré Transport & Logistics will continue to honour its commitments by pursuing its projects, its investments and its goal to develop logistics ecosystems in Africa.

The Bolloré Group will ensure that its transport and logistics activities concerned with the MSC group’s offer continue to act independently of MSC so long as the competent authorities have not approved this project.

*MSC has an exclusivity period until 31 March 2022

Chinese Coal Imports from Mozambique, South Africa, in a Historic Surge

Section: Downstream · October 24, 2021 · No comments |

Export of coal from Mozambique and South Africa to China has leaped to a historic high in 2021, as the world’s second largest economy buys from new sources to deal with a global coal shortage.

As the market has tightened, China started importing from these two countries, which are not its non-traditional markets, like South Africa and Mozambique and expanded its trade with existing trading partners, including Myanmar Colombia and Kazakhstan.

China’s trade in coal with Mozambique and South Africa has a history. The Asian giant returned to import from South Africa years after it stopped as a result of problems with the chemistry of South African coal. Imports from South Africa, mostly used for coal to power generation, moved from zero in December 2020, to 1 Million tonnes in April 2021.

China’s coal trade with Mozambique was active between 2011 and 2014, when it stopped. It was restarted in February 2021. Monthly imports from Mozambique reached 174,000 tonnes in April, the highest level on record, according figures quoted by South China Morning Post.

Egypt Increases Pump Prices of Gasoline

Section: Downstream · July 26, 2021 · No comments |

Subsidy-minded Egyptian government has increased pump prices of petroleum products for the second consecutive quarter.

The government raised fuel prices by up to 3.8%, in response to rising international oil prices. This means that motorists will now pay an extra 0.25 Egyptian Pound (EGP) per litre for 95, 92 and 80 octane gasoline during 3Q 2021.

Fuel prices have now risen 5.9-8% so far this year after the fuel pricing committee effected the first increase at the beginning of the second quarter of 2021.

Diesel and mazut prices remain unchanged.

Gasoline prices, from July 23, 2021:

• 95-octane has moved up 2.9% from EGP 8.75 to EGP 9 per litre.

• 92-octane has moved up 3.2%, from EGP 7.75 to EGP 8.

• 80-octane has moved up 3.8%, from EGP 6.50, to EGP 6.75.

Prices of mazut fuel oil for use in factories will remain at EGP 3.9k per tonne, while diesel prices are still EGP 6.75 per litre.

These prices will remain fixed until through 3Q 2021 and will be reviewed again by the fuel pricing committee at the beginning of 4Q in October.

Crude oil prices have been on a run, increasing by close to 45% in 2021, as the global economy recovers.

ExxonMobil to Sell CNG in its Fuel Stations in Egypt

Section: Downstream · June 8, 2021 · No comments |

Gastec and Cargas, two Egyptian government owned gas suppliers, have signed a cooperation protocol for adding facilities to supply natural gas inside ExxonMobil fuel stations in the country.

The three parties will start the first phase of establishing facilities for supplying cars with compressed natural gas (CNG) in an average of 50 stations, followed by another phase targeting ExxonMobil stations across Egypt, according to the agreement.

By getting ExxonMobil to include CNG supply, Egypt is involving a key fuel retailer in its plan to increase the usage of natural gas in the country.

ExxonMobil is one of the biggest fuel retailers in Egypt, with more than 350 service stations and more than 25 convenience stores, christened On the Run.

The company claims to be the market leader in petroleum product technology in North Africa’s largest eonomy, offering its clients “highly recognized lubricants, industrial greases and expert lubrication programmes and services”, and now, at the behest of the government, it has to include CNG.

In what it calls the natural gas transition, the government is setting up a financing programme through the country’s banks to extend $77Million (or EGP 1.2Billion) in low-interest loans for car owners to convert their vehicles to run on dual-fuel engines; see 150,000 cabs and minibuses outfitted with dual-fuel engines over the course of three years and set up infrastructure in seven governorates to accommodate engines running on natural gas in the first phase, with the remainder of the programme to be expanded to the rest of the country.

Kenyans Entitled to “Reverse Subsidy” on Petroleum Products

Section: Downstream · March 9, 2021 · No comments |

Diesel and gasoline prices have risen sharply in Kenya’s filling stations for the month of March 2021, despite the country having saved money to mitigate the spike in the cost of crude oil.

The Kenyan government increased the levy on petroleum products as pump prices dropped last year. The Petroleum Development Levy jumped from $.04 (Sh5.40) a litre in July from $.003 (Sh0.40), representing a 1,250% hike.

But the country’s plan to “pay back” in form of lower product prices, once crude oil prices reach $50 per barrel, has been scuttled by a lack of legislation.

The government collected over $91Million in the course of the levying over the last seven months.

But now that crude oil prices have soared way above $50, even breaching $70, a legal hitch is holding up the implementation of the fuel subsidy for which the levy was imposed.

Instead of product prices to remain flat, or even drop, despite the robust rise in crude oil prices, diesel prices in Nairobi rose by $.05 (Sh5.51) a litre to $0.92 (Sh101.91)—the highest since February 2020. Gasoline prices rose $.07 (Sh8.09) to $1.05 (Sh115.18) per litre, the highest mark since July 2019, putting pressure on transport costs and inflation.

The subsidy was excluded in the determination of gasoline and diesel prices for the month of March 2021, announced by Energy and Petroleum Regulatory Authority (EPRA) in late February after a monthly review based on the average price of crude oil in February.

Kenyans were not expected to bear costs of diesel prices above $50 a barrel because they had saved for the high cost in form of the levy.

The country’s motorists were to start enjoying a form of “reversed subsidy”, but EPRA says that “ the regulations to manage the subsidy were not yet in place”, so the agency simply raised pump prices based on the February 2021 crude oil average cost of $55.27.

Respite is expected to come in April. “The regulations to operationalise the levy are being developed in order to set up structures on how the fund will be managed,” EPRA says in a statement.

Kenyans use diesel extensively as transport fuel and for power generation.

The Attorney General’s office is expected to approve new regulations to use the fund accrued from the levy to rein in prices of petroleum products.

Nigeria Caves in, Returns to Subsidy of Gasoline Consumption

Section: Downstream · December 13, 2020 · No comments |

By the Editorial Board of Africa Oil+Gas Report

The Nigerian government has reneged on its decision to remove subsidy on gasoline consumption. Following from stringent complaints by the country’s organized labour, the government ruled that the pump price of the product, as of December 8, 2020, which was calculated based on market forces, be reviewed downwards.

The announcement effectively reversed a policy that was informally announced with fanfare by the NNPC in early April 2020, and confirmed the worst expectations of avid callers of petrol price deregulation. The declaration of Chris Ngige, Minister of Labour and Employment, that the Nigerian government had “reduced the pump price of premium motor spirit otherwise known as petrol from ₦168 per litre to ₦162.44 per litre effective from December 14, 2020”, is a major reversal of a victory that the proponents of reforms in the pricing of energy, thought they had won. The government’s statement, ordering a reduction in price, by fiat, undermines any goal of plugging the Two Trillion Naira annual revenue hole that gasoline subsidy had become.

It also increases the risk profile of, any investment in the gasoline part of the hydrocarbon value chain which had been based on the promise, last April, that “subsidy of gasoline prices was gone forever”.

The April 2020 announcement of subsidy removal had come at a time of abysmally low crude oil prices, so that market fundamentals simply led to a reduction in pump prices at the time. As crude oil price is directly correlatable to pump price of gasoline, it had always been a point of argument, that the government might not be able to sustain the subsidy removal whenever crude oil prices moved to higher grounds. This is what has been proven with Mr. Ngige’s declaration.

In the unfortunate case of Nigeria, at the moment, gasoline is imported, so the landing cost is partly determined by the Naira -Dollar exchange, which has, in the past one month, worsened for the Naira. That has meant that even if crude oil prices had not increased, the pump price of gasoline would have kept increasing-if subsidy removal was maintained-as a result of downward pressure on the local currency. But on top of the foreign exchange crisis, an upward movement of crude oil prices has now crept in, ensuring that market-determine gasoline price is moving skywards. With an artificial cap of pump price of gasoline at ₦162.44, and the government lacking courage to move away from price control, Nigeria is unlikely, any time soon, to adjust to whatever prices are dictated by the market, especially now that crude oil prices are likely to keep trending up, even if modestly.

This means that the chronically indebted petro state will open another file in its growing debt profile; it will have to find a way of paying the subsidy it has now introduced by this cap in price.

It is not the most optimal way for the country to manage its revenue at this point in time.

Cameroon Makes Steady Returns from Crude Export Pipeline

Section: Downstream · December 9, 2020 · No comments |

Cameroon received $57Million (or XAF30.71Billion) as transit fees from January 1 to October31, 2020 on the Chad –Cameroon oil pipeline.

The 1,070 kilometre evacuation facility, which pumps crude oil from three fields in the southwest of landlocked Chad to a floating facility 11 km off the Cameroon coast town of Kribi, has been delivering returns to Cameroon since first oil was achieved in 2003.

Cameroon’s Pipeline Steering and Monitoring Committee (PSMC), reports that the revenue is up by 2.5% year-on-year. Over the same period in 2019, the country collected $55Million (XAF29.97Billion) as transit fees.

PSMC reports that 39.91Million barrels of crude oil were transported from the Komé-Kribi terminal in southern Cameroon in the first 10 months of the 2020 fiscal year, compared with 38.79Million barrels during the same period in 2019. This represents an increase of 3%.

“This improvement is the result of increased production from new shippers in Chad, namely PétroChad Mangara, China International Petroleum Company Inc. Chad and Overseas Private Investment Corporation.

The construction of the pipeline was led by ExxonMobil in the early 200s. But the American major has since exited Chad.

Cameroon Will Import 120,000Metric Tons of LPG in 2021

Section: Downstream · November 28, 2020 · No comments |

Cameroon has issued a call for tenders for the importation of 120,000 metric tons (MT) of Liquefied Petroleum Gas (LPG) for 2021.

The Commission in charge of petroleum product imports-CIPP) asked companies with authorization to import the products to submit bids that will ensure the government’s approval of their importation.

The bids will be opened on Tuesday, December 1, 2020, at the Hydrocarbon Price Stabilization Fund’s (CSPH) headquarters in Yaoundé.

The volume to be imported is 4% higher than the 115,000metrric tons of LPG, imported into the country in 2019.

In that year, the National Hydrocarbons Corporation (SNH) produced only 20,000MT of LPG for the local market. So the imported volume is about six times the local production.

The product will be imported in three batches: 60,000 MT, 35,000 MT, and 25,000 MT.

Okie Johnson Ndoh, President of the CIPP, says the 120,000 MT to be imported will cover the country’s needs in the 2021 fiscal year.