Nigeria’s petrol subsidy removal hurting refineries in Europe –Report

*The North America and West Africa, with Nigeria topping the chart, have been the two top destinations for petrol exports from Europe over time, says report

Isola Moses | ConsumerConnect

The recent discontinuation of fuel subsidy regime by President Bola Ahmed Tinubu, GCFR, is taking a toll on European oil refiners, says a report.

The report citing Refinitiv Eikon data indicated the average monthly West African (WAF) fuel imports dropped by 56 percent in the second quarter (Q2) compared with the first quarter (Q1) 2023.

ConsumerConnect also learnt the revealed the North America and West Africa, with Nigeria at the top, have been the two top destinations for petrol exports from Europe (which produces more petrol than it uses).

President Tinubu, in his inaugural speech Monday, May 29, in Abuja, FCT, had announced that the petrol subsidy regime had gone, and the local petrol demand has continued to decrease by about 35 percent, according to report.

“They have been supported by demand from North America, a shortage of high-quality blending materials, disruption caused by low water levels inland and local refinery outages.

“But analysts say the reduction of flows following the upheaval in Nigeria will increase pressure on European refiners, and any winners are likely to be newer Middle Eastern refineries,” report stated.

Speaking about the observable decline in demand, Jeremy Parker, Head of Business Development, CITAC consultancy, which focuses on Africa’s downstream energy industry, said onshore petrol reserves in Nigeria had increased to 960,000 tonnes from an average of 613,000 tonnes between January and June this year, Reuters report noted.

The report further said: “Meanwhile, the black market for smuggled subsidised Nigerian fuel in Togo and neighbouring Benin and Cameroon has collapsed, further reducing demand for shipments via Nigeria.

“There is no reliable data on how much fuel was smuggled out of Nigeria under the subsidy regime, but a comparison of estimates from official and independent sources indicate more than a third of petrol could have left state oil firm NNPC’s depots every day to be sold illegally abroad.

“Without the subsidy, the financial incentive for smuggling disappears,” the report added.