Oil & Energy
Fuel Scarcity Ravages Jos, Enugu, Others …NNPC, NUPENG React
Vehicle owners in the Jos metropolis in Plateau State, are experiencing biting fuel scarcity, forcing many of them to patronise black-marketeers.
Our correspondent, who went round the Plateau capital reports that long queues were seen at the filling stations which had fuel in stock.
A driver waiting to buy fuel at the Mobil Filling Station opposite the Plateau Polytechnic, Jos Campus, Tamen Fredrick, said that he had being in the queue since 6 a.m. but had not been served.
Some filling stations increased the price of petrol from the official N65 to between N75 and N85 per litre, leaving only the NNPC mega station and a few others maintaining the official price.
Suleiman Ahmed, a commercial bus driver, said that he had stopped queuing for fuel at filling stations, saying that black-marketeers served him faster though at a higher rate of N95 per litre.
“The situation has forced us to increase fares so that we can recover the extra money we spend in buying fuel from the black-marketeers,’’ he said.
Meanwhile, commuters now wait longer to board commercial vehicles even at higher costs as few buses and taxis ply the roads.
The Group Managing Director of the NNPC, Mr Austen Oniwon, had earlier in the week dismissed speculations that the fuel scarcity was a ploy by the Federal Government to increase the price of the product.
He said the scarcity of the product was caused by the string of holidays and work-free days declared by the government in April.
However, the Directorate of Petroleum Resources (DPR) has described the scarcity of petrol in Enugu State as artificial.
Our correspondent reports that many filling stations in Enugu and environs locked their gates to motorists on Wednesday, claiming scarcity of the product.
The few that had stocks raised the price from the normal N65 to N68 and N70 per litre.
Investigations show that at Synco Oil and Micco Oil at the 9th Mile Corner near Enugu, the product sold at N70 a litre. It was a similar situation at Real Point and Mobil at Abakpa Nike.
Stations like Externa, Oando and Antonio Oils on Enugu-Onitsha dual carriageway had their mini-gates securely locked while attendants who craved anonymity claimed they did not have supplies.
The MRS, (formerly Texaco) and Unipetrol and other multinationals on the same Enugu-Onitsha sold at N68 per litre.
The attendants said the meters were adjusted by their management late on Tuesday but could not say more.
The managers were unavailable when our correspondent called at the stations on Wednesday.
The NNPC Mega Station, Enugu, which was closed to motorists on Tuesday, re-opened on Wednesday and dispensed petrol at the normal N65 per litre.
Reports indicate that two other NNPC stations at Idaw River Layout and at Abakpa Nike did not have the product.
The DPR Operations Controller for Enugu, Mr Ndy Akpamgbo, said that the scarcity could be artificial.
According to him, there is no product scarcity; the lull could be attributed to the long public holidays, which many tanker drivers took advantage of not to lift products.
“With the public holiday over, everything is expected to revert to normal,” he said.
Chairman of the South East Zone of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Chief Chukwudi Ezinwa, attributed the scarcity to the long holiday.
“There is no scarcity, it is the long holiday, and you know that supplies come from only one source. Things will normalise soon,” he said
Ezinwa, however, alleged that while petrol was still being subsidised, kerosene and diesel had since been deregulated.
“Diesel has been fully deregulated while kerosene is still partially deregulated,” he alleged.
Meanwhile, the National Chairman of Oil and Gas branch of National Union of Petroleum and Natural Gas Workers (NUPENG), Mr Benneth Korie, says the fuel scarcity being experienced in Abuja and some parts of the country will be resolved.
Korie told newsmen in Abuja on Thursday that while NUPENG would play its part to end the scarcity, the Federal Government should move to check the high cost of diesel.
“But 90 per cent of the scarcity we are experiencing in Abuja and other parts of the country is that there is shortage of diesel,’’ he said.
The challenge before NUPENG, he said, was how to distribute more than 400 tankers loaded with fuel in spite of the high cost of diesel.
Korie, who maintained that there was fuel in the depots, said “ the problem is that diesel is scarce in the market.’’
He also said NUPENG would meet with government officials to find a permanent solution to the problem of high cost of diesel.
The Federal Government has expressed optimism in attracting more investments by International Oil Companies (IOCs) into Nigeria to foster growth and sustainability in the energy sector.
This is as some IOCs, particularly Shell and TotalEnergies, had announced plans to divest some of their assets from the country.
Recall that Shell in January, 2024 had said it would sell the Shell Petroleum Development Company of Nigeria Limited (SPDC) to Renaissance.
According to the Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, increasing investments by IOCs as well as boosting crude production to enhancing Nigeria’s position as a leading player in the global energy market, are the key objectives of the Government.
Lokpobiri emphasized the Ministry’s willingness to collaborate with State Governments, particularly Bayelsa State, in advancing energy sector transformation efforts.
The Minister, who stressed the importance of cooperation in achieving shared goals said, “we are open to partnerships with Bayelsa State Government for mutual progress”.
In response to Governor Douye Diri’s appeal for Ministry intervention in restoring the Atala Oil Field belonging to Bayelsa State, the Minister assured prompt attention to the matter.
He said, “We will look into the issue promptly and ensure fairness and equity in addressing state concerns”.
Lokpobiri explained that the Bayelsa State Governor, Douyi Diri’s visit reaffirmed the commitment of both the Federal and State Government’s readiness to work together towards a sustainable, inclusive, and prosperous energy future for Nigeria.
While speaking, Governor Diri commended the Minister for his remarkable performance in revitalisng the nation’s energy sector.
The Federal Government has assured investors in the nation’s gas sector of the security and safety of their investments.
Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, gave the assurance while hosting top officials of Shanghai Huayi Energy Chemical Company Group of China (HUAYI) and China Road and Bridge Corporation, who are strategic investors in Brass Methanol and Gas Hub Project in Bayelsa State.
The Minister in a statement stressed that Nigeria was open for investments and investors, insisting that present and prospective foreign investors have no need to entertain fear on the safety of their investment.
Describing the Brass project as one critical project of the President Bola Tinubu-led administration, Ekpo said.
“The Federal Government is committed to developing Nigeria’s gas reserves through projects such as the Brass Methanol project, which presents an opportunity for the diversification of Nigeria’s economy.
“It is for this and other reasons that the project has been accorded the significant concessions (or support) that it enjoys from the government.
“Let me, therefore, assure you of the strong commitment of our government to the security and safety of yours and other investments as we have continually done for similar Chinese investments in Nigeria through the years”, he added.
Ekpo further tasked investors and contractors working on the project to double their efforts, saying, “I want to see this project running for the good of Nigeria and its investors”.
Earlier in his speech, Leader of the Chinese delegation, Mr Zheng Bi Jun, said the visit to the country was to carry out feasibility studies for investments in methanol projects.
On his part, the Managing Director of Brass Fertiliser and Petrochemical Ltd, Mr Ben Okoye, expressed optimism in partnering with genuine investors on the project.
Crude oil prices recently logged their second monthly gain in a row as OPEC+ extended their supply curb deal until the end of Q2 2024.
The gains have been considerable, with WTI adding about $7 per barrel over the month of February.
Yet a lot of analysts remain bearish about the commodity’s prospects. In fact, they believe that there is enough oil supply globally to keep Brent around $81 this year and WTI at some $76.50, according to a Reuters poll.
Yet, like last year in U.S. shale showed, there is always the possibility of a major surprise.
According to the respondents in that poll, what’s keeping prices tame is, first, the fact that the Red Sea crisis has not yet affected oil shipments in the region, thanks to alternative routes.
The second reason cited by the analysts is OPEC+ spare capacity, which has increased, thanks to the cuts.
“Spare capacity has reached a multi-year high, which will keep overall market sentiment under pressure over the coming months”, senior analyst, Florian Grunberger, told Reuters.
The perception of ample spare capacity is definitely one factor keeping traders and analysts bearish as they assume this capacity would be put into operation as soon as the market needs it. This may well be an incorrect assumption.
Saudi Arabia and OPEC have given multiple signs that they would only release more production if prices are to their liking, and if cuts are getting extended, then current prices are not to OPEC’s liking yet.
There is more, too. The Saudis, which are cutting the most and have the greatest spare capacity at around 3 million barrels daily right now, are acutely aware that the moment they release additional supply, prices will plunge.
Therefore, the chance of Saudi cuts being reversed anytime soon is pretty slim.
Then there is the U.S. oil production factor. Last year, analysts expected modest output additions from the shale patch because the rig count remained consistently lower than what it was during the strongest shale boom years.
That assumption proved wrong as drillers made substantial gains in well productivity that pushed total production to yet another record.
Perhaps a bit oddly, analysts are once again making a bold assumption for this year: that the productivity gains will continue at the same rate this year as well.
The Energy Information Administration disagrees. In its latest Short-Term Energy Outlook, the authority estimated that U.S. oil output had reached a record high of 13.3 million barrels daily that in January fell to 12.6 million bpd due to harsh winter weather.
For the rest of the year, however, the EIA has forecast a production level remaining around the December record, which will only be broken in February 2025.
Oil demand, meanwhile, will be growing. Wood Mackenzie recently predicted 2024 demand growth at 1.9 million barrels daily.
OPEC sees this year’s demand growth at 2.25 million barrels daily. The IEA is, as usual, the most modest in its expectations, seeing 2024 demand for oil grow by 1.2 million bpd.
With OPEC+ keeping a lid on production and U.S. production remaining largely flat on 2023, if the EIA is correct, a tightening of the supply situation is only a matter of time. Indeed, some are predicting that already.
Natural resource-focused investors Goehring and Rozencwajg recently released their latest market outlook, in which they warned that the oil market may already be in a structural deficit, to manifest later this year.
They also noted a change in the methodology that the EIA uses to estimate oil production, which may well have led to a serious overestimation of production growth.
The discrepancy between actual and reported production, Goehring and Rozencwajg said, could be so significant that the EIA may be estimating growth where there’s a production decline.
So, on the one hand, some pretty important assumptions are being made about demand, namely, that it will grow more slowly this year than it did last year.
This assumption is based on another one, by the way, and this is the assumption that EV sales will rise as strongly as they did last year, when they failed to make a dent in oil demand growth, and kill some oil demand.
On the other hand, there is the assumption that U.S. drillers will keep drilling like they did last year. What would motivate such a development is unclear, besides the expectation that Europe will take in even more U.S. crude this year than it already is.
This is a much safer assumption than the one about demand, by the way. And yet, there are indications from the U.S. oil industry that there will be no pumping at will this year. There will be more production discipline.
Predicting oil prices accurately, even over the shortest of periods, is as safe as flipping a coin. With the number of variables at play at any moment, accurate predictions are usually little more than a fluke, especially when perceptions play such an outsized role in price movements.
One thing is for sure, though. There may be surprises this year in oil.
lrina Slav
Slav writes for Oilprice.com.
