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IPMAN Claims Nigeria’s Monthly Fuel Subsidy Exceeds N700 Billion

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The Independent Petroleum Marketers Association of Nigeria (IPMAN) has indicated that the country’s monthly expenditure on fuel subsidies may exceed N700 billion.

This projection was made by Mohammed Shuaibu, the Secretary of IPMAN in Abuja-Suleja, in a statement released on Monday.

Shuaibu’s comments followed the disclosure of data by the Major Oil Marketers Association of Nigeria (MEMAN) last Wednesday, which revealed that the landing cost of petrol was N1,117 per liter as of the previous day.

Shuaibu challenged the accuracy of the figures provided by the Nigerian National Petroleum Company Limited (NNPC) and the Nigerian government regarding fuel subsidy expenditures.

He expressed concern that the official figures might not fully reflect the true cost of the subsidy. “Petrol prices are influenced by global supply and demand factors,” Shuaibu stated.

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“When international prices rise, it affects Nigeria as well. The NNPC, which is the sole importer of petrol, may not be transparent about the actual costs.”

According to Shuaibu, the substantial discrepancy between the reported landing cost of N1,117 per liter and the lower ex-depot price of N585 per liter, set by the NNPC, underscores the potential scale of the subsidy.

He warned that this discrepancy suggests the monthly subsidy expenditure could be well over N700 billion. This situation implies that Nigerians should brace for possible increases in fuel pump prices.

In contrast, Heineken Lokpobiri, the Minister of State for Petroleum Resources, has consistently maintained that the fuel subsidy program has been removed.

However, further analysis supports Shuaibu’s concerns. With petrol prices ranging between N617 and N750 per liter, depending on the location, the ex-depot price of N585 per liter results in a subsidy of N532 per liter.

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Given that the Federal Ministry of Petroleum Resources reported a daily consumption of 44.3 million liters in October 2023, this amounts to an estimated daily subsidy cost of N23.57 billion. Over a month, this totals more than N700 billion.

This issue comes at a time of ongoing tension between the Dangote Refinery and the Nigerian Midstream and Downstream Petroleum Regulatory Authority over concerns about substandard petroleum products.

Additionally, recent comments from former Kaduna State Governor Mallam Nasir El-Rufai suggest that the current administration, led by President Bola Tinubu, may be spending more on fuel subsidies compared to previous administrations.

Trade Union Congress President Festus Osifo has also hinted at the possibility of a quasi-subsidy being applied to petrol prices, adding to the complexity of the situation.


 

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Dangote Refinery Resumes Import Of Oil from the US to Increase Production Capacity

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Dangote Refinery has resumed its acquisition of crude oil from the United States, marking a significant shift in its strategy to boost refining capacity and overall production.

In a report by Bloomberg on Wednesday, it was revealed that a cargo of two million barrels of WTI Midland crude, sourced from Chevron Corp., is expected to be delivered to Dangote Refinery next month.

This marks the first purchase of US oil since the refinery paused foreign crude imports.

The move indicates a shift in the refinery’s supply strategy, which had previously been focused on Nigerian crude, particularly as it seeks to ramp up operations.

This new purchase raises questions about the status of the Nigerian government’s Naira-for-crude deal, which was hinted at in early October 2024.

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The agreement, aimed at trading crude oil in exchange for the Nigerian naira, has faced uncertainty.

Some experts suggest that the deal might be stalling, or that the refinery might not be receiving the expected crude oil supply from the Nigerian National Petroleum Company Limited (NNPC).

Dangote Refinery’s recent decision to purchase crude from Chevron, a major US oil company, comes at a time when the refinery is actively scaling up production capabilities.

The refinery had been under intense scrutiny as it works toward becoming a key player in Nigeria’s oil industry.

While it had been procuring Nigerian oil, this new shipment of WTI Midland crude from the US underscores its reliance on diverse global suppliers to meet its production goals.

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In fact, Chevron has reportedly booked the supertanker Azure Nova to transport the crude from the US Gulf, with the shipment scheduled to arrive at Dangote Refinery around December 5.

While the Nigerian government’s Naira-for-crude initiative remains in question, economist Kelvin Emmanuel recently stated that Dangote Refinery still purchases crude from the Nigerian government in dollars, suggesting that the refinery’s operations may not yet fully align with the federal government’s policy on local crude sales.


 

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NNPCL Launches Utapate Crude to Increase Nigeria’s Oil Exports

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The Nigerian National Petroleum Company Limited (NNPCL) has officially launched a new crude oil grade, the Utapate crude oil blend, to enhance the country’s foreign currency earnings and increase its presence in the global energy market.

NNPCL spokesperson Olufemi Soneye made the announcement in a statement on Wednesday.

This significant development was unveiled at the Argus European Crude Conference, held in London, where the Managing Director of NNPC E & P Limited (NEPL), Nicholas Foucart, emphasized that the introduction of Utapate marks a milestone for Nigeria’s crude oil exports.

Foucart shared that production of the Utapate Field began in May 2024, and since then, the output has grown rapidly to 40,000 barrels per day (bpd) with minimal downtime.

He highlighted that five cargoes of the new blend have already been exported, mainly to Spain and the East Coast of the United States.

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Additionally, two more cargoes are scheduled for shipment in November and December 2024, further boosting Nigeria’s crude oil exports.

One of the key reasons for Utapate’s success in the international market is its highly attractive qualities, according to Foucart.

The Utapate crude is sourced from Oil Mining Lease (OML) 13, which is fully operated by NEPL and its partner Natural Oilfield Services Ltd (NOSL), a subsidiary of SEEPCO Ltd. OML 13 holds significant reserves, including 330 million barrels of crude oil, 45 million barrels of condensate, and an impressive 3.5 trillion cubic feet (tcf) of gas.

This rich reserve underpins the potential for future growth in Nigeria’s crude oil production.

Looking ahead, Foucart outlined plans to ramp up production from the current 40,000 barrels per day to 50,000 bpd by January 2025.

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By June 2025, production is expected to reach between 60,000 and 65,000 bpd, with a longer-term target of 80,000 bpd by the end of 2025.

Lawal Sade, Managing Director of NNPC Trading Limited, explained that the pricing structure of the Utapate blend is similar to that of the Amenam crude.

This is because both are light sweet crudes, highly valued by refiners worldwide for their low sulphur content and efficient yield of high-quality refined products.

The API gravity and other properties of Utapate make it an attractive option for global refineries.


 

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Dangote Petroleum Refinery Begins Exportation Of Products To Neighbouring West African Countries

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Dangote Petroleum Refinery begins exportation of products to neighbouring West African countries. A report was made that the Dangote refinery just shipped gasoline to the coast of Togo, West Africa. Although the shipment of the gasoline is going to the coast of Togo it can also be taken somewhere else in West Africa.

Chairman of NPA, Ghana speaks at the OTL Africa Downstream Oil Conference in Lagos states that importing from Nigeria reduces prices and freight costs for them rather than importing from Europe.

“If the refinery reaches 650,000bpd a day capacity, all that volume cannot be consumed by Nigeria alone, so instead of us importing as we do right now from Rotterdam, it will be much easier for us to import from Nigeria and I believe that will bring down our prices,”


 

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