Page 7 - AfrOil Week 33 2019

AfrOil POLICY AfrOil
Nigeria headed for downstream audit
THE government of Nigeria is gearing up to conduct a wide-ranging audit of the country’s downstream oil and gas infrastructure.
In a statement, the Petroleum Products Pricing Regulatory Agency (PPPRA) said that it intended to launch the probe before the end of the year. “Oil and gas processing, storage and distribution facilities, jetties downstream and pipelines, retail outlets for oil and gas, etc., will be the focus of the survey,” it said.
“All oil and gas depot owners, marketers, retail outlets and LPG plant owners are stake- holders in this exercise,” it added. Regular assessments help these stakeholders collect accurate data and ensure steady deliveries of fuel to the market, it asserted. ey also make the Nigerian downstream sector more attrac- tive to investors, it quoted PPPRA’s Executive Secretary Abdulkadir Saidu as saying.
e audit will review the impact of the gov- ernment’s policies and regulations on the viabil- ity and operating environment of downstream operators, the statement said. It will also seek to identify gaps in existing infrastructure and to determine whether the relevant parties have closed previously identi ed loopholes, it noted.
Fuel smuggling
PPPRA did not say whether the probe would also assess reports of fuel smuggling into neigh- bouring countries.
O cial data from the Department of Petro- leum Resources (DPR) show that Nigeria cur- rently consumes around 52mn litres per day of gasoline. But the Guardian, a local newspaper, reported last week that domestic consumption
Namibian official explains rejection of refinery proposals
levels appeared to be closer to 45mn lpd, with the remaining 7mn lpd being transported ille- gally across the border to buyers in Chad and other neighbouring states.
If smuggling is taking place at this level, Nigeria would forego signi cant amounts of revenue from gasoline sales, the newspaper remarked. It speculated that the country might be losing as much as NGN1.085tn ($2.983mn) per day, assuming that black-market fuel is being traded at a price of NGN300 ($0.82) per litre, or NGN115 ($0.32) per litre above the domestic level. (Nigeria’s government subsi- dises fuel prices below world market levels.)
Losses from fuel smuggling are likely to have a negative e ect on the Nigerian economy as a whole, an industry expert told the Guard- ian. “How can Nigeria survive when it pays for the petroleum consumption of more than ve countries? If the prevailing price of crude oil remains below $70 [per barrel] by the end of this year, Nigeria will slip back into recession by the end of the rst quarter of 2020,” said the expert, who was not named.™
Namibia’s Ministry of Mines and Energy con rmed last week that it was not yet ready to approve any of the proposals it has received for the construction of an oil re nery.
Simeon Negumbo, the ministry’s executive director, told New Era that Namibian o cials had already reviewed multiple offers from potential investors. At the low end, he said, some companies have o ered to build a plant with a throughput capacity of about 25,000 bar- rels per day for as little as NAD4bn ($263.6mn). Others have submitted bids of up to NAD120bn ($7.9bn) for larger facilities capable of handling up to 100,000 bpd, he said.
So far, though, all of these proposals have
fallen short of the government’s requirements, he stated.
“No approval has been granted yet to any particular company to proceed with the con- struction of an oil re nery ... [Before] the min- istry can provide its approval for the project to go ahead, [the] companies themselves have an obligation to conduct feasibility studies and establish [whether] oil re ning in Namibia is a feasible business to undertake. None of the intended investors [has] yet submitted such a feasibility study to the ministry,” he explained
Negumbo stressed that Windhoek was sym- pathetic to some of the arguments made by sup- porters of the re nery plan..
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Vanguard (Nigeria)
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