The Nation Newspaper

Tag: Downstream

  • ‘Downstream deregulation will promote shipping’

    TOTAL deregulation of the downstream oil sector will spur  growth in the maritime sector, Chief Executive Officer, Petrocam Nigeria Limited, Mr Patrick Ilo has said.

    He said more private refineries would come on stream with attendant multiplier effects on the downstream oil and maritime industries.

    He said deregulation would open doors for investors, adding that the development would lead to improved production of petroleum products in the country.

    Ilo said: “Nigeria is going to have a larger refinery capacity, as well as buoying the activities of vessel owners, when the oil sector is fully deregulated. What will happen in the long run is that the country will not only improve its domestic fuel consumption, but also become a net exporter of fuel.

    “When this happens, the nation’s shipping industry will be able to use many of its vessels to export fuel, couple with the fact that more privately owned shipping companies will come up to take their own share of the gains.”

    Ilo said dereulation would translate to increased foreign earnings.

    He regretted that local shipping firms were not maximising the opportunities in the oil and gas industry, because many of their activities have been contracted to owners of vessels abroad by marketers.

    He said marketers paid millions of dollars to freight fuel into the country, adding that this fund would be kept in-country, once more local refineries are streamed.

    Citing Dangote Refineries, he said the completion of the project this year would open doors for shipping.

    He said the Dangote Petrochemical Refineries has the capacity to produce more than 500,000 barrels of oil per day, adding that it is a good omen for the nation’s oil and maritime sector.

    He said the issue of spending forex abroad, under the guise of importing refined petroleum products would become forgotten, once local refineries start operating.

    According to him, marketers will not be considering  forging a partnership with Vitol and other refiners abroad, when the sector is fully deregulated.

    The Federal Government had approved the building of modular refineries with capacity to produce about 20,000 barrels per day and thereafter increase production.

  • Mobil: partial deregulation crippling downstream sector

    The refusal of the Federal Government to deregulate the downstream oil sector completely is inhibiting the growth of the sub-sector, Mobil Plc Managing Director, Mr Tunji Oyebanji has said.

    He lamented that the development had hindered competition, making it difficult for the operators to provide services and further improve on profitability.

    In an interview with The Nation in Lagos, he lamented that there was no competition among operators, despite that they had big-ticket transactions in the industry.

    He said: “In the last few years, some operators have been engaging in the production and exploration of crude oil, which is good for the industry. It is good because they are showing to the global market that they have what it takes to do what the International Oil Companies(IOCs) are doing. But that is not enough, as they are yet to introduce services at the retail end of the market to grow their profit well such that they become one-stop firms with several array of services for users of fuel in the country.’’

    He said many of the operators were unable to serve their customers to attract more people and invest in the sub-sector.

    “How many of the firms declared profit in billions? How many of the firms boast of services that could as well compete with those in foreign climes? This is because there is not enough competition among them that would make such things happen,” he said.

    According to him, the issue of deregulation was beyond fixing a price regime for fuel, as it also requires setting standards for the firms that bring in fuel into the country.

  • How to solve downstream oil challenges, by Kachikwu

    How to solve downstream oil challenges, by Kachikwu

    Minister of State for Petroleum Resources, Mr. Ibe Kachikwu, yesterday, said appropriate pricing of petroleum products, fixing existing refineries and encouraging private investors to build new ones are some of the ways to permanently address the challenges in the downstream oil sector.

    He however warned that care must be taken to ensure that people are not made to suffer unduly while attempting to review the prices of petrol and other commodities.

    Kachikwu, who spoke at the ongoing Nigeria International Petroleum Summit in Abuja, said: “Ultimately, the greater challenge that this country would have and still has is that of pricing.

    “Everybody wants power, available gas and freely delivered fuel with no queues, but people are not willing to make the sacrifices that are essential for these things to happen.

    “Sometimes, it is a pricing issue. We have got to get to a point where we got to deal with some of these issues in a manner that doesn’t hurt our people but at the same time create the level of efficiency as to remove arbitrages and patronages that are inbuilt in them.

    “Refineries and local production are key. We expect between 12 and 18 months corridor of construction and hopefully, at that point, we would get our refineries back. However, if we get refineries back by 2019, does that solve the problem? No, it doesn’t. You still have to deal with the pricing issues, because nobody is going to build a refinery and sell products at a loss.”

    The challenges notwithstanding, he said the Federal Government would be setting parameters and incentives for building of refineries.

    According to him, this is to ensure that a typical producer, especially the small level producers, are able to see enough incentives to be able to get some of their products refined in-country and then exported.

     

  • Reps praise NIPCO for boosting downstream

    Reps praise NIPCO for boosting downstream

    The House of Representatives Committee on Petroleum Resources (Downstream) has commended NIPCO for its acquisition of ExxonMobil’s 60 per cent equity in Mobil Oil Nigeria Plc.

    According to the lawmakers, the acquisition has demystified the impression of International Oil Companies (IOCs) that it is difficult for indigenous oil companies to market petroleum products.

    Committee Chairman Hon. Joseph Akinlaja made the commendation when the committee visited  NIPCO Plc headquarters in Lagos. He said the feat is a boost for higher indigenous stake in the oil and gas industry.

    “There is no rocket science in selling white products as the pioneer foreign companies make it look like it is an impossible terrain due to their monopoly in the market.

    “Among the seven foreign companies that ventured into the downstream sector, only Total Plc still remains. Others have yielded their stakes to indigenous companies,” Akinlaja said.

    According to him, NIPCO, by acquiring Mobil Oil, has expanded its horizon and impacted the downstream sector as a key player. He noted that as an indigenous company, NIPCO has performed creditably, despite that it is young in the sector. He added that the Green Chamber was proud of the organisation for its local content exploits.

    Akinlaja said despite the recession, the company has not sacked any worker and still maintains good housekeeping and high standards.

    He also commended the robust presentation of the company at the  public hearing of the House of Representatives on kerosene explosions, adding that the visit was to see for themselves the practicability of the suggestions based on NIPCO’s modus operandi in the handling of the product.

    NIPCO Group Managing Director Mr. Venkataraman Venkatapathy said the company has become the first indigenous downstream outfit to have high influx of retail outlets of white products and liquefied petroleum gas (LPG) to its name.

    “It is also a proud achievement that NIPCO won the bid to acquire Mobil Plc not only because of our push but, amongst all, we were seen as a company whose technical, safety and experienced manpower is very high and is on records,” he said.

    Venkatapathy noted that despite high recession, employees’ jobs were maintained with no retrenchment of any sort from NIPCO, and, more importantly, the company had reinvested its profit in the country.

    NIPCO’s Group Executive Director, Alhaji Abdulkadir Aminu, said stakeholders should come together to state their challenges and analyse in documentation the aspects which the Federal Government could do and also the private sector could do to participate effectively in the hydrocarbon industry .

    He assured that NIPCO, which prides itself as the only marketing company that gave the highest equity participation to marketers in the ownership of the company, would never let Nigerians down. “We will also increase our participation in the oil and gas industry in all aspects as we add value to the common man through our various corporate social responsibility (CSR) programmes,” he said.

  • Forex, oil price slump cripple downstream sector

    The inability to access foreign exchange (forex) and the lingering crude oil price slump have been the major challenges facing the downstream subsector of the petroleum industry, the Chief Executive Officer, OVH Energy Marketing Limited (formerly Oando Marketing Limited), Yomi Awobokun has said.

    Awobokun stated this while fielding questions from reporters during the formal presentation of name change of Oando Marketing Limited to OVH Energy Marketing Limited in Lagos yesterday.

    He said OVH represents the new shareholders of the firm comprising Oando, Vitol and Helios. Although the corporate name has changed, the products of the firm are licensed to be marketed as Oando in order to sustain the Oando heritage and entrepreneurship.

    Awobokun said: “All the shareholders agreed that a name change will boost the capacity of the company but to sustain the Oando heritage and entrepreneur OVH is licensed to market its products as Oando. Our intention is grow our reach stabilise prices and supplies and add value to our shareholders.

    “The major value of this partnership is that it enabled access to capital by Oando. The downstream has been going through significant challenges including the unavailability of forex, drop in crude price and as a result of the entire externalities the economy is going through. The future leaders of this industry are those that are able to access capital. So the best of the deal is that it puts Oando to access capital and ensure supply. The partnership puts us in good stead to dominate the market.”

    On the allegation of sale of off-spec fuel, he said the report was malicious because it was very difficult for any marketer to import off-spec and it would be an international non-governmental organisation that would discover that.

  • Marketers hail deregulation of downstream sector

    The deregulation of the downstream oil subsector  is paying off as marketers are buying fuel from multiple outlets at prices.

    Independent Petroleum Marketers Association of Nigeria (IPMAN) National President, Chief Chinedu Okoronkwo said  his members have been buying fuel with ease from the Nigerian National Petroleum Corporation (NNPC) and private depot owners since the sector’s deregulation last May.

    He said due to deregulation, marketers were free to source for fuel at outlets or channels that benefit them.

    According to them, IPMAN members get premium motor spirit (PMS) from the Nigerian National Petroleum Corporation (NNPC) at N132.8 excluding the cost of transportation,  while those that are not satisfied with the NNPC price approach other importers and negotiate for a lesser price.

    Okoronkwo said: “The Federal Government through the NNPC was selling 30,000 litres of petrol to independent marketers at approximately N2.295million before it increased the price of fuel. Now the government sells 30,000 litres of petrol to marketers at approximately N3.99million. The differential is about N1.7million. Also, the government sells the product to us at N132. 28.

    “When marketers add the cost of transportation to it, about N10 per litre, depending on the distance, they sell at N145 per litre. Some marketers even sell at either N142 per litre or N143 per litre, and they make profit. That is the beauty of deregulation and by implication market forces.”

    According to him, the market is governed by the forces of demand and supply, and in the process, provides a flexible price regime for fuel marketers. The market, Okoronkwo noted, is structured in such a way that marketers can enter the market and exit the market anytime they like.

    He said contrary to reports, there was never a time the  Federal Government banned independent marketers from accessing depots for fuel, noting  that  the issue between the government and the his members has been resolved.

    “The issue of differentials is a normal thing in the industry. Whenever there is an official increase in the pump price of fuel, marketers would compare the old price and the new price and see the one that favours them. That was what happened when the price was increased to N145 per litre and that issue has been resolved as marketers have adjusted to the new price,” he added.

  • Marketers key into govt’s downstream deregulation

    Marketers key into govt’s downstream deregulation

    •Import 90m mt of fuel

    Marketers have begun aligning with the Federal Government’s policy on subsidy removal. They have begun to source foreign exchange (forex) on their own, and have imported over 90 million metric tonnes (mt) of fuel in the last 12 days, The Nation has learnt.

    The period covers May 11 to 23, after the Federal Government announced the new fuel pump price of N145 per litre.

    It was gathered that marketers, including the independent ones, such as NIPCO and Capital Oil, among others, have begun sourcing for forex for fuel importation to support the Federal Government’s policy of moving away from fuel subsidy.

    One of the marketers, who spoke on condition of anonymity, said no fewer than seven fuel cargoes have arrived in the country in the last two weeks. The source said each vessel contains 15,000 million metric tonnes of fuel, which translates to over 90 million metric tonnes of fuel.

    The source said the vessels arrived in Nigeria within two days and have discharged fuel to marketers, adding that marketers are not leaving any stone unturned to key into the government’s downstream deregulation programme.

    The source said: “Many of the jetties that are designated by the Federal Government to deliver petroleum products to marketers have been busy in the last few days.  There are increased activities at the North Oil Jetty (NOJ), Petroleum Wharf Jetty (PWJ), and Bop Oil Plant (BOP) in recent times. The marketers discharge fuel from the jetties for onward distribution to their outlets nationwide. Based on this, the marketers have embraced the government’s deregulation policy.”

    The National President, Independent Petroleum Marketers Association of Nigeria (IPMAN), Mr. Chinedu Okoronkwo, confirmed this, saying his members have been using their own forex to import fuel.

    He said: “The process of importing fuel by marketers is going on. Many of the marketers have contacts and information to leverage on to bring in fuel.I quite believe that the issue of sourcing of forex for fuel importation will not be a major problem.

    Also, the Executive Secretary, Major Oil Marketers Association of Nigeria (MOMAN), Obafemi Olawore, said it would take time to ensure compliance whenever the government announces a new policy. He, however, said his members have been importing fuel since the Federal Government increased the pump price from N86.50 per litre to N145 per litre.

    “As we speak, we (major marketers) have made some imports. Two of our marketers are even discharging fuel now,” he added.

  • ‘Govt inhibiting downstream oil sector’s growth’

    The Federal Government should be blamed for the poor performance of the downstream sub-sector of the oil and gas industry, former Executive Secretary, Petroleum Product Pricing Regulatory Agency (PPPRA), Mr Reginald Stanley, has said.

    He said the actions of successive governments showed that they were not ready to formulate policies to accelerate the growth of the sector.

    He said the Federal Government did more damage to the sector by not totally deregulating it.

    Stanley said the decision of the government to hold on to the regulation of the sub-sector was killing initiatives, adding that it has stalled the development and implementation of ideas that would drive activities in  the sector.

    Stanley, who spoke during a stakeholder’s forum in Lagos, said it is either the government improve the growth of the sub-sector by deregulating it, or allow it to suffer more problems.

    He said: “Angola, Ghana, India and other countries have deregulated the downstream segment of the petroleum industry, and they are better for it.

    “Nigeria cannot be an exception if it really wants to move the capacity utilisation in the downstream above its current capacity of 25 per cent. “

  • Fed Govt inhibits downstream growth- ex-PPPRA’s boss

    The Federal Government should be blamed for the abysmal performance recorded in the downstream sub-sector of the oil and gas industry not private operators, former Executive Secretary, Petroleum Product Pricing Regulatory Agency (PPPRA), Mr Reginald Stanley, has said.

    He said the actions of successive governments showed that they were not ready to formulate policies to accelerate the growth of the sector.

    He said the Federal Government did more damage to the downstream sector by not deregulating it.

    Stanley said the decision of the government to hold on to the regulation of the sub-sector was killing initiatives, adding that the development has stalled the development and implementation of ideas that would drive activities in  the sector.

    Stanley, while speaking during a stakeholder’s forum in Lagos, said it is either the government improve the growth of the downstream sub-sector by deregulating it, or allow it to suffer more problems.

    He said: “Angola, Ghana, India and other countries have deregulated the downstream segment of the petroleum industry, and they are better for it. Nigeria cannot be an exception if it really wants to move the capacity utilisation in the downstream above its current capacity of 25 per cent.

    He added: “We (as Nigerians) should be able to learn a lesson from Ghana that deregulated its downstream sub-sector, and has since then, been having it good in the area of production of petroleum products fuel, fixing of their prices, making the products available to consumers, among other issues.”

  • NNPC set to transform downstream

    NNPC set to transform downstream

    A strategy to transform the downstream sector of the oil industry is ready. It will make the sector perform optimally, the Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Dr Emmanuel Kachikwu yesterday said.

    Kachikwu, who was represented by the Managing Director, National Engineering and Technical Company (NETCO), an arm of NNPC, Mrs Bolanle Ashafa, said the transformation becomes imperative because the Federal Government has committed  over N5 trillion on subsidies in the last five years, pointing out that such a scheme is unsustainable in view of the amount involved.

    He said subsidy  creates distortions in government’s revenue distribution as a result of round tripping and unnecessary carryover of expenditure every year in a way that is difficult to sustain, or control.

    Kachikwu said fuel subsidy accounted for 20 per cent of Federal Government’s budget in 2013, adding that why subsidy is not sustainable, government is not in control of the factors that influence retail fuel price, particularly fluctuations of crude oil price at the international market.

    Be sides, he stated that through the transformation strategy, the Downstream sector of the oil and gas industry would become transparent, efficient and create fair market for operators who show capacity to play better in the industry.

    He said the development would help in rehabilitation of the Brown-field refineries in order to attract International Oil Companies ((IOCs) that have hitherto jettisoned them.

    “We at NNPC have resolved to implement a new strategy to transform the Nigerian midstream oil sector into a transparent, efficient and fair market by ensuring the rehabilitation  of the brown-field refineries using a new business model.”

    Kachikwu, who spoke at the 2015 edition of the National Association of Energy Correspondents (NAEC) conference in Lagos, said Nigeria is the highest importer of premium motor spirit (PMS) in Africa, despite its huge resources.