Petrol Import to West Africa Declines by 56% Due to Nigeria’s Fuel Subsidy Removal
- Demand for fuel decreased in Nigeria and West Africa due to the fuel subsidy removal
- North America and West Africa, led by Nigeria, have been the top two markets for European petrol exports
- One of Europe’s leading markets for gasoline has shrunk, threatening to squeeze European refiners
Unlock the best of Legit.ng on Pinterest! Subscribe now and get your daily inspiration!
Statistics from Refinitiv Eikon have shown that the second quarter of 2023 saw a 56% decrease in the average monthly petrol import to West Africa.
The statistics also revealed that June loadings from the Amsterdam-Rotterdam-Antwerp hub to West Africa decreased to 629,000 tonnes from 895,000 in 2017.
Loadings decreased from 1.5 million tonnes in July 2022 to 627,000 tonnes in July.
Raj Rajendran, Lead Oil Analyst at Refinitiv, explained that there has been a decline in demand from West Africa.
Source: Getty Images
PAY ATTENTION: Share your outstanding story with our editors! Please reach us through info@corp.legit.ng!
Legit.ng earlier reported that the monthly petrol consumption dropped by 18.5 million litres as depot prices crashed.
This follows a report that Nigerian President Bola Ahmed Tinubu has stated that his administration will not continue with payment of fuel subsidy.
Nigerians are demanding less fuel
Since the termination of petrol subsidies on May 29, there has been a decrease in demand for fuel from Nigeria.
Foreign refiners from Russia, the Middle East, and Europe are actively vying with one another to expand exports of their refined petrol to Nigeria despite the decline in demand.
Punch revealed that petrol imports from Russia increased by 84% in the previous year. Direct Russian petrol flows into West Africa have increased since January. However, Refinitiv Eikon data shows that the total volumes, essentially nonexistent in recent years, have risen to about 800,000 tonnes this year.
The report states that one of Europe’s main markets for gasoline has shrunk, threatening to squeeze the European refiners, after Nigeria removed fuel subsidies, which destroyed much of the country’s domestic demand and a regional market for smuggled fuel.
Historically, the top two markets for European petrol exports have been North America and West Africa, led by Nigeria. Because Europe produces more petrol than it consumes, its refiners must rely on exports to maintain profit margins.
In addition, it noted that a continuous fall in European refining margins over the past few years due to increased competition from the Middle East, the United States, and Asia was reversed after Russia invaded Ukraine due to worries about fuel scarcity.
As competition from the Middle East, the United States, and Asia rose in recent years, European refining margins steadily declined. However, after Russia invaded Ukraine, earnings increased due to concerns about a possible fuel scarcity.
According to Refinitiv Eikon statistics, benchmark profit margins for petrol in northwest Europe have remained stable at roughly $27 per barrel.
They have been helped by local refinery outages, a lack of high-quality blending ingredients, North American demand, and low wave levels inland.
Three fuel subsidy removal palliatives Tinubu must implement in Nigeria
A research report has suggested ways the Federal Government can provide palliatives to cushion the impact of fuel subsidy on Nigerians according to a report by Legit.ng
The suggestions were disclosed in a report titled "Fuel Subsidy Removal Short-term Pain, Long-term Gain", published by Deloitte, a multinational auditing firm, in June 2023.
Source: Legit.ng
