Russia-Ukraine war may prolong fuel scarcity in Nigeria as oil vessels face delays on sea

Due to the ongoing war between Russia and Ukraine, the fuel scarcity situation being faced in Nigeria for the past three weeks may further be prolonged.

According to the report said the vessels that bring refined petroleum products into the country from countries around Ukraine and Russia are likely to face some delays.

According to the Punch reported that traders who supply Nigeria with refined petroleum products might pause a little due to the deficit in the supply of crude oil cargoes from the Nigerian National Petroleum Company Limited.

NNPC brings refined petrol into Nigeria using contractors or traders through its Direct Sale Direct Purchase scheme.

Under the scheme, the oil company provides crude oil to its trading partners, who in turn supply the NNPC with refined products worth the volume of crude received from the national oil company.

But impeccable sources both at the oil firm and among traders stated on Sunday that Nigeria through the NNPC had a deficit of about 17 cargoes in its DSDP obligation due to low oil production.

This, they said, could further prolong the fuel scarcity situation being faced nationwide, except something drastic such as the complete deregulation of the downstream oil sector was implemented.

They also noted that the Russia-Ukraine war might worsen the petrol supply situation in Nigeria as products could be hindered from leaving refineries in the region on schedule.

Nigeria imports its refined petroleum products, as its refineries are currently dormant.

“What we face now could be described as a perfect storm, which is when many things go wrong at the same time. We have a fundamental problem, but that problem happens at a time that other things happened and so it aggravates everything,” an oil trader with the NNPC, who pleaded not to be named due to the sensitive nature of the matter, stated.

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The source added, “Now, Russia has attacked Ukraine. What is the impact of Russia’s attack of Ukraine on Nigeria? Russia is an oil-producing country, for Ukraine, our refined products come from that part of the world, not only Western Europe.

“So, the price has gone up because our refined products come from that part of the world and disturbances such as the one happening there will impact supply one way or the other.”

On concerns around DSDP and how it would further prolong petrol scarcity, another trader stated the continued theft of crude oil had impeded NNPC’s ability to settle its crude oil supply obligations to traders on schedule.

The source said, “Nigeria is assigned about 1.7 million barrels of crude oil production per day by OPEC, but its production is between 1.3 and 1.4 million barrels daily. But that is a different thing. Now, from the about 1.3 million barrels that the country produces daily, people are stealing from it.

“They are creating holes in pipelines and the ones that they steal are used in illegal refineries in Rivers State, causing soothe and dirt in peoples’ lungs. The other ones that they steal, they put in batches and go to the high sea to sell them.

The source added, “Now the NNPC brings in products through Direct Sale Direct Purchase of crude. Now I’m telling you that the NNPC owes traders crude oil under the DSDP scheme and you know why? It owes crude oil because people are stealing the crude and they don’t have enough crude to pay.

“So the NNPC owes the traders who bring them refined products. So when they (NNPC) say give me some more, the traders will reply by saying, but you are already owing, pay us. The NNPC cannot pay because people are stealing crude.

“This tells you that the petrol scarcity problems may continue if something drastic, particularly the deregulation of the downstream sector, is not done as soon as possible.”

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