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AfrOil POLICY AfrOil

“In our view, the fortunes of the sector could resulting plunge in fuel demand. FBNQuest said
change with the growing possibility of full pric- that Nigerian households were spending 20%
ing deregulation,” he added. less on transportation than a year ago, exclud-
Nigeria’s government recently introduced a ing aviation.
more market-based template for gasoline pric- “Given relatively softer petroleum products
ing, and the central bank is working to unify demand in H1 2020, the near-term outlook
foreign exchange rates. FBNQuest said these for the sector is certainly subdued,” Osadiaye
steps raised prospects that gasoline price ceilings said. “However, long-term prospects appear
would be ended completely. promising.”
The new pricing template for gasoline factors FBNQuest estimates that gasoline consump-
in petroleum product costs and the foreign cur- tion contracted by 40-45% in the second quarter.
rency exchange rate at which oil marketing firms It expects the sales and earnings of Total Nigeria
import fuels. to fall by 6% and 70% year on year in 2020.
Competition among fuel marketers is also “Our projections are driven by both rela-
growing, the asset manager said, adding that tively lower petroleum product demand and a
Ardova and 11 Plc were “leading the charge.” double-digit decline in product pricing year-to-
The pair became the top distributors of gaso- date,” Osadiaye said. “Our forecasts assume a
line in the first quarter, with a combined 23.8% mild rebound in COVID-19 cases and that eco-
share of the market, and of jet kerosene, with a nomic activities are allowed to continue under
27.2% share. Previously the Nigerian subsidiary such circumstances.”
of France’s Total held this position. Despite its status as Africa’s biggest oil pro-
If the new pricing template is kept, effectively ducer, Nigeria still imports most of its fuel,
deregulating the sector, FBNQuest expects com- undermining its trade balance. Its main state-
petition to intensify. owned refineries are too outdated to operate
“Under this scenario, reach and distribution properly and compete with imports. What fuel
will be a key competitive advantage,” Osadiaye it does produce domestically comes mainly from
said. “As such, Total and Ardova are presently in illegal refineries in the Niger Delta region. How-
the best position to capture growth.” ever, it is hoped that fuel market deregulation
The industry has taken a significant hit from will help spur the development of new domestic
the coronavirus (COVID-19) pandemic and the refineries. ™

PROJECTS & COMPANIES
Saipem: Nigeria’s $2bn new

urea plant due online in 2020

NIGERIA PRODUCTION will start at Nigerian conglom-
erate Dangote’s $2bn fertiliser plant in Lagos this
year, Italian contractor Saipem has confirmed to
Bloomberg.
The facility will use gas supplies from Nigeria
Gas Co. and Chevron Nigeria as its feedstock to
produce 3mn tonnes per year (tpy) of urea and
ammonia. This makes it the largest plant of its
kind in the world.
Test runs began at the facility in March,
although the coronavirus (COVID-19) pan-
demic led to disruptions,” Saipem’s chief oper-
ating officer Maurizio Coratella said.
“Train two commissioning and testing will
start soon, as such activities will be overlapped
with train one,” he said. “The project is planned
for completion within the end of 2020, with The urea unit is at the Dangote fertiliser plant (Photo: AllNews.ng)
train one starting production within weeks and
train two following soon after.” A Dangote official also confirmed in June
Saipem is making special arrangements to that the plant would be in operation by year-end,
make sure deadlines are met, the CEO said, although traders have warned that commercial
including providing dedicated flights for ven- output might not start until as late as the second
dors and suppliers. quarter.

Week 30 29•July•2020 www. NEWSBASE .com P15