Connect with us

Business

Europe, Mediterranean Crises Shouldn’t Affect Africa’s Petroleum Price Benchmark – FG

Published

on

The Federal Government, through the Nigerian Midstream and Downstream Petroleum Regulatory Authority, has said crises in Western Europe and the Mediterranean should not automatically determine petroleum product prices in Nigeria and other African countries, arguing that West Africa needs a regional benchmark that reflects its own market realities.

It said West Africa could no longer afford a situation where disruptions in Western Europe or the Mediterranean automatically influence the prices of petroleum products in African markets, even when the factors behind those disruptions have little or nothing to do with the region.

The Authority Chief Executive, Rabiu Umar, said this on Tuesday at the second West Africa Refined Fuel Market Conference in Abuja, where regulators, refiners, traders, financiers and other industry stakeholders renewed efforts to establish a transparent regional pricing system for refined petroleum products.

The conference is jointly hosted by the Authority, S&P Global Commodity Insights and West Africa Regulator Forum, with the theme: “Funding West Africa Infrastructure & Distribution to Create a Transparent Market for Regional Price Benchmarks.”

The conference is aimed at moving the region from discussions about price discovery to the actual development of a functioning petroleum trading and pricing hub.

Umar said the continued use of external price references meant that petroleum consumers in Nigeria and other West African countries could be affected by disruptions that occurred thousands of kilometres away and were unrelated to the fundamentals of their own markets.

READ ALSO: Oil Prices Jump Further as Hopes for Hormuz Deal Fade

He said the situation was no longer sustainable, particularly as West Africa’s refining landscape was changing rapidly and Nigeria was emerging as a major supplier of refined petroleum products to the region.

The NMDPRA boss, who also doubles as the WARF Chairman, said, “If we look at the refining capacity on the continent and how it has been increasing, it simply doesn’t make sense that if there is a problem in Western Europe or in the Mediterranean, it is going to affect our pricing in Africa.

“There may be issues which have absolutely nothing to do with what is going on here. And prices should be determined on the basis of geopolitical issues, demand and supply, and complexities within the market. So we feel this is a great opportunity for Africa, and West Africa in particular, to really have something that is specific to us. If we have a problem, it is reflected in the pricing. If we don’t have a problem, then we are to be shielded to an extent, I would say, from what is going on in other locations.”

The call comes against the backdrop of renewed volatility in international energy markets following the crisis around the Strait of Hormuz, one of the world’s most important oil shipping routes. The latest tensions around the strait have pushed Brent crude sharply higher, with the benchmark reaching above $90 per barrel at points in recent days before easing as markets weighed diplomatic efforts between Iran and Oman.

That distinction, he argued, is at the heart of the campaign for a West African reference market.

He said, “If we look at the refining capacity on the continent and how it has been increasing, it simply doesn’t make sense that if there is a problem in Western Europe or in the Mediterranean, it is going to affect our pricing in Africa. There may be issues which have absolutely nothing to do with what is going on here in the continent. But prices are determined on the basis of geopolitical issues, demand and supply, and complexities within the market. So we feel this is a great opportunity for Africa, and West Africa in particular, to really have something that is specific to us.

“If we have a problem, it is reflected in the pricing. If we don’t have a problem, then we are shielded to an extent, I would say, from what is going on in other locations.”

He explained that the roadmap required reliable financing, refinery capacity, stronger logistics and storage networks, interconnected ports, roads, rail and pipelines, harmonised product regulations and standards, transparent and comparable market data, stronger cross-border cooperation and the mobilisation of regional and international capital.

“A reference price is not by itself a trading hub. A conference is not a market. Regulatory cooperation, important as it is, cannot substitute for physical infrastructure, commercial liquidity, market information, and operational excellence on which a credible trading hub must stand. Africa possesses resources. Africa possesses demand. Africa possesses refining capacity, and that is also expanding. What we must now build is the infrastructure that efficiently connects all three”, he added.

Umar also urged West African countries to stop duplicating infrastructure and instead develop assets based on their comparative advantages.

He said, “This is also why we must think regionally. Not every country needs to replicate every asset that we have. So for example, Nigeria today stands as one of the most tanked countries. If you look at the number of tanks we have versus the consumption that we have, there is absolutely no point.

“If you look at Europe, for example, our region is a trading hub for oil and gas, for all the refined products. Why? The other countries could also have invested in similar infrastructure, which would have led to duplication. The most important thing is what each country’s specific advantage is relative to the region, so that way everybody is doing what they are really, really good at. And this is why we must think regionally. We have to think regionally.”

He also identified differences in petroleum product specifications across countries as another major obstacle to cross-border trade. According to him, varying specifications make it difficult to move products seamlessly from one West African market to another and undermine the development of a single regional market.

“We also have the second issue of what is the quality of products. What is the specification of products from one country to another? We cannot have from here to Nigeria, to Ghana, to the United Republic, even our right-next-door neighbours having different products and specifications. What that does is that it makes trading across the border very, very difficult.”

Umar said regional integration would therefore help optimise existing infrastructure, reduce duplication and direct scarce capital towards projects capable of delivering the greatest regional impact.

“Capital will go where projects are bankable. Risks are understood, regulation is predictable, and returns can be sustained. Our responsibility as governments, regulators, and players is therefore to create the conditions that allow capital to move confidently. For investors, predictability matters. For operators, efficiency matters. For consumers, affordability matters, and reliability. For regulators, safety, integrity, competition, and compliance matter. A sustainable market must accommodate all four”, he stated.

The NMDPRA boss further identified reliable market data as a critical requirement for credible regional price discovery.

He said a benchmark could not be trusted if it was based on an opaque market with limited transactions and unreliable information on supply, demand, inventories and product availability.

“A credible benchmark cannot emerge from an opaque market. Price discovery requires sufficient transactions, willing participants, reliable reporting, and confidence that market information indeed reflects actual commercial activity.

“We must therefore develop a culture in which reliable information on supply, demand, inventories, infrastructure, availability, and legitimate transactions can support better commercial decisions and effective regulation.”

He said the West Africa Regulators Forum had a major role to play in creating an environment where different national markets could operate with sufficient regulatory compatibility to facilitate cross-border trade.

“We do not need every country to have identical laws. We need sufficient compatibility to allow trade to occur safely, transparently, and efficiently. And this is the difference, really, between regulatory uniformity and regulatory integration.”

Umar said the regional roadmap beyond 2026 would focus on five key areas, including improving physical market mobility, financing strategic infrastructure, optimising product standards and regulations, strengthening market data and transparency, and building a complete trading ecosystem.

He said a mature regional market would require refiners, traders, terminal operators, ship owners, marketers, banks, insurers, commodity exchanges, data providers and regulators to operate within an environment of commercial trust.

“And when these elements come together, the benchmarks will learn to be imposed. The market itself will produce the benchmark,” he said.

He said the ultimate objective was to transform West Africa from a region that largely consumes petroleum products priced elsewhere into an increasingly influential centre of price discovery, trading, investment and value creation.

“In 2025, we developed the roadmap. In 2026, we must finance and execute it. In the years ahead, our major success must be a West African market in which products move more efficiently, supply is more secure, investors have greater confidence, regional trade expands, and prices increasingly reflect the fundamentals of our own markets.”

Courtesy – The Punch

Business

Group Credits PINL with Safeguarding Environment, Farms

Published

on

A group has given kudos to the Pipeline Infrastructure Nigeria Limited (PINL) for effective pipeline surveillance and community interventions during the recent flooding in parts of the Niger Delta.

The Niger Delta Progressive Alliance (NDPA) in a statement signed by its Convener, Nse Victor Udoh, noted that the PINL’s operational efficiency and sustained maintenance of pipeline corridors helped prevent additional environmental damage, preserve farmlands and protect aquatic ecosystems from threats associated with pipeline failures and oil spills.

According to the NDPA, annual flooding in the Niger Delta poses serious environmental risks, particularly when floodwaters come into contact with damaged pipelines, oil spills and illegal activities around oil and gas infrastructure.

The organisation noted that the recent flood season was different, as there were no reported cases of widespread oil contamination of floodwaters, dead fish or the spread of oil into farms and residential areas attributable to pipeline failures.

READ ALSO: DPRP Decries Rising Fuel Imports, Despite Strong Local Supply Capacity

It said the development underscored the importance of preventive pipeline management, stressing that effective infrastructure protection was often measured by disasters that were prevented rather than emergencies that attracted public attention.

According to the group, regular patrols, monitoring and right-of-way surveillance enabled PINL to identify and address potential threats before they escalated into major incidents.

It added that inspection, maintenance and repair activities had also contributed to maintaining the integrity of critical pipelines, especially during periods of heavy rainfall and flooding.

The NDPA further commended PINL for its interventions in flood-affected communities in Rivers, Bayelsa and Imo States.

It cited the company’s restoration efforts in areas previously affected by illegal refining, as well as empowerment programmes targeting women and youths in host communities.

Udoh said the initiatives showed that corporate social responsibility should go beyond occasional charitable gestures and become part of a sustained commitment to community welfare and development.

“We commend Pipeline Infrastructure Nigeria Limited, therefore, on two counts that this season has made inseparable: the efficiency of its service, tested by a flood and found equal to it, and the seriousness of its social responsibility,” he said.

He added that the group had observed that farms remained protected and waterways retained their ecological value despite the flooding.

“This season, our farms still stand where the water reached them. Our creeks still hold their life,” Udoh said.

The alliance maintained that infrastructure security and community welfare were closely linked in the Niger Delta, where pipelines pass through several communities and environmentally sensitive areas.

It urged PINL to sustain the standard, stressing that protection of critical national infrastructure, environmental preservation and improved host-community welfare should remain mutually reinforcing objectives.

The NDPA described PINL’s performance during the flood season as an example of how operational efficiency and responsible community engagement could combine to protect energy infrastructure and the environment.

Continue Reading

Business

Dangote Threatens Petrol Importers’ Supply Over Product Blending

Published

on

As concerns continue to mount over product quality and allegations of blending of imported fuel with products refined locally against major oil marketers, the Dangote Petroleum Refinery and Petrochemicals (DPRP), is contemplating cutting off supplies to the culprits.

The proposed measure could take effect as early as this week, subject to further consultations and any last-minute intervention, according to sources familiar with the situation.

The grave concern is that some marketers are allegedly blending imported Premium Motor Spirit (PMS), also called petrol, with petrol purchased from the DPRP before distributing the resulting product in the market.

READ ALSO: Nestoil Boosts Oil Production with $28m Drilling Fleet

This has left the refinery concerned that such practices could make it difficult to distinguish between products it supplied and the products subsequently blended or handled by third parties.

“It is difficult to understand why we would invest heavily in producing high-quality petroleum products for Nigerians, only for those products to be mixed with imported products of uncertain quality and the resulting product to be associated with the refinery,” a senior official at the $20bn Lekki-based plant, who spoke in confidence due to the lack of authorisation to speak on the matter, stated.

The refinery has also raised concerns about what it called a lack of a standard laboratory and adequate quality-control infrastructure for imported petroleum products, particularly the capacity to independently verify and certify the specifications of products entering the Nigerian market.

The latest development comes barely days after the DPRP warned that rising petrol imports were forcing it to export excess stocks despite having sufficient capacity to meet Nigeria’s domestic demand.

The refinery said imported PMS accounted for approximately 43 percent of fuel supplied into the Nigerian market in July, saying the continued issuance of petrol import licences had created uncertainty over domestic demand and made production and inventory planning increasingly difficult.

The DPRP said it had consistently maintained sufficient inventory and reserved product volumes to guarantee steady supply to the Nigerian market, but argued that keeping large stocks indefinitely was becoming commercially unsustainable when it could not determine how much imported petrol would enter the country.

“As a responsible energy provider, we have always endeavoured to keep adequate reserves to satisfy local demand at all times. However, in an environment where significant volumes of imported PMS continue to enter the market through licences issued by the regulator, and where there is limited visibility on future import volumes, it becomes commercially unsustainable to continue holding excess inventory indefinitely.”

The refinery said the surplus petrol that could not be absorbed by the domestic market would consequently have to be exported to regional and international markets.

The proposed restriction on sales to importing marketers now adds a new dimension to the refinery’s concerns, as Dangote moves from highlighting the commercial impact of rising imports to considering measures that would prevent marketers from sourcing its petrol while simultaneously importing competing products.

Continue Reading

Business

Nigeria Beats 2026 Foreign Reserves Target, Hits $53.1b

Published

on

CBN Prohibits Foreign Banks' Rep Offices From Banking Operations

Nigeria’s economic fortune is benefiting from the Middle East crisis, as the impact of capital inflows from stronger crude oil earnings has seen her foreign reserves climb to record $53.1 billion, beating the $51.04 billion year-end target.

Data available on the Central Bank of Nigeria’s (CBN) website indicated that the reserves closed at $53.1 billion on August 24, which is the highest level in almost 18 years.

Any analyses of the growth shows that the difference in reserves position places the Nigerian economy in good stead, because it can cover over 12 months import.

It is noteworthy that Nigeria’s external reserves fuel the CBN’s capacity to support the local currency and meet external obligations, have continued to rise steadily, since the face-off between the United States and Iran.

Further analysis of the data displayed by the CBN showed that the liquid portion of the external reserves stood at $52.5 billion.

Biztellers reports that Brent crude traded around $87 per barrel, within the week, well above Nigeria’s 2026 federal budget benchmark of $64.85.

READ ALSO: Shell Endorses Regional Action Plan for Safe Helicopter Services

With the Middle East crisis not showing signs of abating, analysts believe the price rebound would largely bolster Nigeria’s fiscal revenues.

The line of thought is popular among those who know, because as a crude oil exporter, Nigeria will continue to earn more petrodollars, which they argue would support the domestic currency – naira’s stability, while pumping the volume of external reserves.

In its economic projections for 2026, the CBN targeted stronger oil earnings, foreign exchange market reforms and improved external capital inflows to achieve the year-end reserves projection.

According to analysts, the current reserves position reinforces the steady growth in Nigeria’s external buffers.

The founder/Chief Executive Officer of the Centre for the Promotion of Public Enterprise (CPPE), Dr Muda Yusuf, earlier hinted at a positive outlook for Nigeria’s external reserves as he does not see anything derailing the forex and fiscal reforms that have brought about stability and improvement in external reserves, as reported by The Nation.

Yusuf said: “Well, the outlook for me is positive because I don’t see anything derailing these forex reforms, fuel subsidy etc. It is these reforms that have brought about stability.”

The CBN data further showed that Nigeria’s external reserves have maintained a steady upward surge in recent months.

The reserves started June at $49.80 billion and crossed the $50 billion mark by June 5, reaching $50.12 billion.

On June 15, reserves had increased further to $50.81 billion before rising to the current position. The reserves stood at $51.9 billion on July 31, and continued.

The sustained increase reflects stronger foreign exchange inflows and improved liquidity conditions in the country’s external sector.

The CBN Governor, Olayemi Cardoso, said: “This strong buffer continues to reinforce investor confidence in the Nigerian economy and support exchange rate stability.”

The CBN’s decision to clear over $7 billion unsettled FX backlogs raised investors’ confidence in the economy, supporting dollar inflows and foreign reserves accretion, Cardoso added.

The CBN boss had explained that although he had no idea where the fund for the backlog clearance would come from, when he assumed office, he believed it was the right thing to do, and gave investors his word.

He said: “Credibility is at the heart of any central bank. If you don’t have credibility, people do not trust you and they do not invest in your economy. When I took office, I made a promise we would pay the backlog, the verifiable backlog of monies that were owed by Nigeria to third parties.

“And it was, at the time, estimated at over $7 billion US dollars. And to be honest with you, I had no idea how I was going to do it, but I just felt it was not something to be negotiated.”

Cardoso explained that Nigeria needed to ensure that its integrity is maintained. Analysts believe the higher reserve level could enhance the CBN’s capacity to support exchange rate stability and meet external obligations.

Continue Reading

Copyright © 2022. Biztellers, powered by Alphaxristi.

0
Would love your thoughts, please comment.x
()
x