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Russia Ukraine War: Fuel scarcity may continue, oil vessels face delay on sea

The ongoing conflict between Russia and Ukraine may extend the almost three week shortage of Premium Motor Spirit, also known as gasoline, in Nigeria, since the bulk of refined products entering the country from the warring zone and its surrounding areas are expected to be delayed.

On Sunday, it was also reported that traders supplying Nigeria with refined petroleum products may take a break due to a crude oil cargo supply shortage from the Nigerian National Petroleum Company Limited.

Through its Direct Sale Direct Purchase scheme, the NNPC brings refined fuel into Nigeria via contractors or traders.

The oil corporation sends crude oil to its trading partners, who then supply the NNPC with refined goods equal to the level of crude received by the national oil company, according to the arrangement.

However, reliable sources within the oil company and among traders said on Sunday that due to low oil output, Nigeria DSD commitment was around 17 cargoes short.

They claimed that unless something radical was done, such as complete deregulation of the downstream oil sector, the gasoline scarcity issue in the United States would worsen.

They also stated that the Russia_Ukraine conflict could exacerbate the petrol supply problem in Nigeria by preventing products from leaving refineries in the region on time. Nigeria now imports refined petroleum products since its refineries are idle.

“What we are dealing with right now could be defined as a perfect storm, in which a lot of things go wrong at once. We have a basic problem, but it occurs at a time when other things are happening, so it aggravates everything,” said a NNPC oil trader who asked not to be identified owing to the sensitivity of the situation.

“Russia has now attacked Ukraine,” the insider continued. What is Nigeria response to Russia invasion on Ukraine? Russia is an oil producing country, and our refined products, unlike those from Western Europe, come from there.

“So the price has gone up because our refined products originate from that part of the world, and supply disruptions like the one that is going on there will effect supply in some manner.”

Concerns about DSDP and how it will prolong petrol scarcity were expressed by another dealer, who noted that continuing crude oil theft has hampered NNPC capacity to meet its crude oil supply obligations to traders on time.

“OPEC assigns Nigeria roughly 1.7 million barrels of crude oil production per day, but its production is between 1.3 and 1.4 million barrels daily,” the source said. That, however, is a another matter. People are now stealing from the country daily production of around 1.3 million barrels.

“They are blowing holes in pipes, and the ones they steal are utilized in illicit refineries in Rivers State, causing suffocation and dirt in people lungs,” says one source. They put the rest of the ones they steal in batches and sell them on the high seas.

“Now the NNPC brings in items through Direct Sale Direct Purchase of crude,” the insider continued. Now I’m going to tell you why the NNPC owes traders crude oil under the DSDP plan. It owes crude oil because it is being stolen and it does not have enough petroleum to pay.

“As a result, the NNPC owes traders who deliver refined products to them.” So, if the NNPC says, “Give me some more,” the traders will respond, “But you’re already owing us, so pay us.” People are taking crude, thus the NNPC is unable to pay. This means that unless something dramatic, such as deregulation of the downstream industry, is done as quickly as feasible, the petrol scarcity problems are likely to persist.”

When contacted, Garba Deen Muhammad, NNPC spokeswoman, requested that our correspondent send him an SMS or WhatsApp message about the situation. This was emailed to him, but he had yet to respond to the messages as of the time this report was filed.

Meanwhile, the cost of transporting crude oil on super sized tankers from the Gulf Coast of the United States to the United Kingdom and Asia has risen as a result of attacks on ships in the Black Sea, which have imposed a risk based premium on global shipping markets.

SOURCE: OperaNews

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