Price of Premium Motor Spirit (PMS) also known as petrol has been raised to as high as N170 per litre, highest in the history of Nigeria, yesterday, the same day troubled crude oil market buoyed by declining prices and second wave of COVID-19 in Europe and America forced down prices of crude oil to $40 per barrel at the international market. The PwC in a reaction to the lower crude oil price noted in a report entitled; “Africa oil and gas review 2020” that the pandemic has caused the worst oil industry crisis in history and that oil demand will likely never recover to prepandemic levels.
“With the oil price at approximately $40 per barrel, oil-exporting countries will experience long-term decline in their export revenues as a result of the renewed weakness in global oil prices, coupled with the accelerated transition to renewables in key importing countries,” the report read.
While the price of crude struggles below budget, the Pipelines and Products Marketing Company (PPMC), an-nounced hiked the ex-depot price of petrol to N155.17 per litre. Before this action by PPMC, a subsidiary of the Nigerian National Petroleum Corporation (NNPC), the ex-depot price of petrol was N147.67 per litre.
The NNPC in a statement, however, clarified that although there was a slight increase in the price based on the prevailing realities of market forces of demand and supply, the correct prices, as can be seen on PPMC’s “Customer Express” platform (online portal for procurement of petroleum products) are: Ex-Coastal Price – N128, and Ex-Depot Price (with collection) – N153.17.
A statement by the Group General Manager, Group Public Affairs Division, Dr. Kennie Obateru, advised marketers to make their purchases through the online “Customer Express” platform (PPMCCustomer. Express/login/authenticate) at the recommended prices. Depending on the marketer involved or the proximity of their filling stations to the loading depot, there is always a differentials of between N12 and N15 between the ex-depot price and the pump price.
This makes the N155.17 new ex-depot price to shots up the expected pump price to as high as N170 per litre. The ex-depot price is the price at which the product is sold by the PPMC to marketers at the depots. In its PMS price proposal for November, the PPMC put the landing cost of petrol at N128.89 per litre, up from N119.77 per litre in September/ October. It said the estimated minimum pump price of the product would increase to N161.36 per litre from N153.86 per litre.
The National Operation Controller, Independent Petroleum Marketers Association of Nigeria, Mr Mike Osatuyi, in a telephone interview with our correspondent, said the over N7 increase in ex-depot price would translate into an increase in pump prices.
He said: “Like I told your colleague who called me earlier, there is going to be an increase in the pump price. We are expecting the pump price to range from N168 to N170 per litre.” Meanwhile, refiners around the world have been announcing permanent closures of refinery capacity this year after the pandemic crushed fuel demand worldwide, and significant overcapacity still remains, the International Energy Agency (IEA) said at the weekend In its monthly Oil Market Report, the EIA said that permanent shutdowns of refinery capacity had reached 1.7 million barrels per day (bpd).
But another more than 20 million bpd crude oil distillation capacity now sits idle, the Paris-based agency said, noting that “there remains significant structural overcapacity.” In the past few months alone, refiners have announced more than ten permanent closures of refineries, with the highest capacity planned for closure, 1 million bpd, in the United States, according to the IEA.
“There were capacity shutdowns planned for 2020-2021 prior to COVID- 19, but the bulk of the new announcements reflect pessimism about refining economics in a world suffering from temporary demand collapse and structural refining overcapacity,” the agency said in the report. Refiners in the United States are idling refinery capacity and cutting jobs to cope with the losses stemming from the demand crash in the pandemic. Refiners are also shutting down permanently or converging oil refineries as the demand crash from the pandemic continues to crush refining margins. Several refiners and oil majors have recently announced permanent closures in the United States and Asia, while analysts believe that some high-cost refineries in Europe could also be shut down over the next few years as margins for processing crude into fuels are expected to remain depressed.