14 January 2012

Nigeria: Fuel Scarcity Imminent, Vessels Unable to Discharge at Ports

The strike by the organised labour and other civil society coalitions in protest against fuel subsidy removal may plunge Nigeria into yet another fuel crisis as vessels carrying imported petrol are said to be unable to deliver supplies to Nigeria owing to the closure of the ports.

Reuters reported Friday that petrol tankers carrying gasoline were unable to discharge at the ports.

"Ports are shut, so yes it is affecting things. Nothing in or out at the moment" Reuters quoted a gasoline trader to have said.

Nigeria currently imports virtually all her petrol because the four refineries, situated in Port Harcourt, Rivers State, Kaduna and Warri in Delta, with combined capacity to refine 445,000 barrels per day of crude had performed dismally over the years despite the huge sums of money expended on their turn around maintenance and repair of pipelines that convey crude oil to them by successive administrations year by year.

The decision of the Federal Government to end fuel subsidy regime with effect from January 1 had led to hike in pump prices of petroleum products, prompting the organised labour and civil society coalitions to embark on a nation-wide industrial action.

However, the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) has threatened to shut down crude oil production from Sunday (tomorrow) if government fails to revert to the N65 per litre.

Although oil industry sources have doubted PENGASSAN would be able to stop crude exports completely as much of production is automated and the country has crude stored in reserves, the threat by the oil worker is causing panics in the international oil market as Nigeria is a major supplier of crude to the United States, world's biggest oil consumer, Europe and Asia.

"PENGASSAN shall be forced to go ahead and apply the bitter option of ordering the systematic shutting down of oil and gas production with effect from Sunday January, if the Federal Government of Nigeria fails to yield to the popular agitation of Nigerians on her unacceptable approach to fuel subsidy removal," PENGASSAN said.

Meanwhile, Brent crude futures dropped in volatile trade on Friday as the euro fell amid ongoing worries about the euro zone, although the threat of supply disruptions in Nigeria lent some support to prices.

Reuters reported that by 13334 GMT, Brent crude futures were 22 cents lower at $111.04 a barrel, reversing earlier gains after hitting an intra day high of $112.50.

U.S. light crude futures were up 18 cents at $99.28 per barrel, having touched an intra-day high of $100.19 earlier in the session.

The newswires noted that tensions between Iran and the West, together with fears of output disruptions in Nigeria as the country entered its fifth day of strikes, lent support to prices. "The main risk heading into the weekend is Nigeria, where discussions are ongoing between the government and the unions on the fuel subsidies," Reuters quoted analyst from Petromatrix, Olivier Jakob to have said.

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