Fuel supply improves in Lagos, scarcity persists in Abuja

By Energy Worth

Relief may be on the way for commuters as fuel supply to Lagos shows signs of improvement with queues at filling stations in the metropolis thinning out Tuesday.

Vice-President Yemi Osinbajo had spent the Chrismas day touring Lagos depots and filling stations, empathising with distraught Nigerians, many of who had spent long hours at the stations without getting petrol to buy, and assuring them that the products would be available shortly.

But the scarcity of petrol in service stations within the Federal Capital Territory (FCT) Abuja and its environs, which the Nigerian National Petroleum Corporation (NNPC) on Sunday said would begin to ease off in 48 hours lingered with a lot of stations remaining shut or still with long vehicular queues.

This is just as petrol marketers under the aegis of Depot and Petroleum Products Marketers Association (DAPPMA) exonerated themselves from the current fuel crisis across the country, stating that they presently do not have fuel in their depots and tank farms nationwide.Energy Worth from its monitoring of situations in the city, observed that not much had changed since the NNPC assured Nigerians that it was on top of it, and visible changes should be expected within two days. The NNPC also assured the public on Sunday that at most, the country would see the end of the bad situation before the week ends.Its Group Managing Director, Dr. Maikanti Baru, said then at a press briefing that President Muhammadu Buhari had ordered security agencies in the country to tackle instances of petrol diversion and hoarding by marketers, and that with such presidential directives, the NNPC was sure of curtailing the scarcity.

“With the drive and the load-out we are doing, if we get full compliance on diversion and hoarding, we don’t see it going beyond the next two days. However, you know there is always a time-lag, but we will continue to put all the efforts to see that this does not go beyond the end of this week,” Baru said then.He further buttressed his confidence on the corporation’s plans to curtail the situation, saying: “As I am talking, NNPC has 13 vessels that are discharging products in the various ports. The 13 vessels will have about 650 million litres on the average, so there is product. And, we are also expecting three more vessels to come in before the end of the week. In terms of sufficiency, I can comfortably tell you that we have about 814 million litres of product that will be in the tank or distributed before the end of the month.”Energy Worth however, reached out to the Group General Manager, Public Affairs of the corporation, Mr. Ndu Ughamadu, for an update on the plans to supply more products to stations across the country, as well as certain claims raised by petrol marketers, and he promised to get back to it but never did before this story was filed.
Meanwhile, DAPPMA whose disclosure Tuesday appeared to have dampened hope for a quick end to the fuel scarcity, said in a statement signed by its Executive Secretary, Mr. Olufemi Adewole, that it could neither confirm nor dispute NNPC’s report of product sufficiency in the country.

Adewole said: “While we cannot confirm or dispute NNPC’s claims of having sufficient product stock, we can confirm that the products are not in our tanks and as such cannot be distributed. If the products are offshore, then surely, it cannot be considered to be available to Nigerians.”The NNPC had stated that vessels filled with petrol were discharging the commodity in ports across the country on a daily basis, while marketers were lifting directly from its stocks. However, Adewole insisted that its members’ depots were empty.

He said that members of DAPPMA were ready to undertake 24 hours loading and truck-out of petrol if the corporation would provide it.
He also disclosed that its members had procured large orders of fuel from the NNPC, which were yet to be supplied to them.“NNPC imports and distributes through DAPPMA, Major Oil Marketers Association of Nigeria (MOMAN) and Independent Petroleum Marketers Association of Nigeria (IPMAN). Our members pay PPMC/NNPC in advance for petroleum products, and fully paid up PMS orders that have neither been programmed nor loaded is in excess of 500,000 metric tonnes, about 800 million litres, as at today, and enough to meet the nation’s needs for 19 days at a daily estimated consumption of 35 million litres,” Adewole, stated.

He equally blamed the unending fuel crisis on the challenges in the Direct Sales Direct Purchase (DSDP) scheme, rising price of the commodity in the international market and the high interest rates charged by banks in the country.According to him, “We all know that we presently run a fixed price regime of N145 per litre for PMS without any recourse to subsidy claims, however, we also have no control on the international price of crude oil. We understand that the NNPC meets this demand largely through its DSDP framework, however, due to price challenges on the DSDP platform, some participants in the scheme failed to meet their supply quota of refined petroleum products, especially PMS, to NNPC. This is the main reason for this scarcity.”

Adewole added that since Hurricane Katrina, the international price of petrol had not dropped below $600 per metric ton, while the exchange rate used and the interest rate charged by banks are N306 to a dollar and 25 per cent respectively.He noted that anytime the NNPC assumes the role of sole importer of petrol, there are usually issues of distribution because marketers own 80 per cent of the functional receptive facilities and retail outlets in Nigeria, not the NNPC.He said the oil marketers were still committed to the progress of Nigeria, adding: “We, petroleum products marketers do empathise with all Nigerians who are going through difficulties at this time, spending hours on fuel queues because of the current fuel scarcity due to no fault of yours.

“Sadly, some people have blamed marketers for hoarding fuel. Unfortunately, this is so far from the truth. Hoarding fuel is regarded as economic sabotage and we assure all Nigerians that our members are not involved in such illicit acts.”Energy Worth had reported exclusively that the scarcity was caused by some of the participants in the DSDP scheme, previously referred to as offshore crude oil processing agreements (OPAs) and crude-for-products exchange arrangements, who imported diesel for NNPC in November/December 2017, instead of petrol as stipulated in their contracts.NNPC had in April this year signed about $6 billion worth of deals with local and international traders to exchange about 330,000 barrels per day (bpd) of crude oil for imported petrol.
Under the latest DSDP scheme, the NNPC excluded the big players with strong footprint in the downstream sector such as Italy’s ENI, India’s Essar, Shell-BP, Forte Oil, Mobil (11Plc), Oando, Conoil, and NIPCO in an apparent move to empower smaller companies.Even international oil trading giants such as Total, Vitol and Trafigura that made the list were allocated the same small volumes of crude – 33,000 barrels per day, with smaller Nigerian downstream players in the list.

It was gathered that these oil traders engaged by the NNPC were supposed to bring back petrol into the country after taking crude oil to the international refiners.
It was, however, learnt that in the months of November /December, some of these companies converted their DSDP contracts into diesel as they could not bring back petrol as a result of the high cost of the product in the international market.The implication, it was learnt, is that the market is flooded with diesel, which is also imported by other private marketers as a deregulated product, while petrol, which other marketers lack capacity to import and have been relying on NNPC for supply, becomes a scarce product, leading to the current crisis.Crude Oil slips towards $65 as Forties Pipeline moves closer to restartMeanwhile, oil edged lower towards $65 a barrel on Tuesday, but remained within sight of its highest level since mid-2015, as the looming restart of a North Sea oil pipeline offset support from Organisation of the Petroleum Exporting Countries (OPEC)-led supply cuts.

The North Sea Forties pipeline, which plays an important role in the global oil market, is being tested following repairs and full flows should resume in early January, its operator Ineos said on Monday.

Brent crude, the international benchmark for oil prices, slipped 15 cents to $65.10 a barrel.Prices hit $65.83 on December 12, 2017, the highest since June 2015. US crude was down at $58.40.

Trading activity was thin due to the ongoing Christmas holiday in many countries.

Brent has risen 17 per cent in 2017. The OPEC, plus Russia and other non-members, have been withholding output since January 1 to get rid of a glut.The producers have extended the supply cut agreement to cover all of 2018.

Iraq’s oil minister said on Monday there would be a balance between supply and demand by the first quarter, leading to a boost in prices. Global oil inventories have decreased to an acceptable level, he added.

That’s earlier than seen by OPEC’s latest official forecast, which calls for a balanced market by late 2018.

While the OPEC action has lent support to prices all year, the unplanned shutdown of the Forties pipeline on December 11 pushed Brent to its mid-2015 high.Forties plays an important role in the global market as it is the biggest of the five North Sea crude streams underpinning Brent, the benchmark for oil trading in Europe, the Middle East, Africa and Asia.

Rising production in the United States is offsetting some of the OPEC-led cuts.

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