The Petroleum Products Retail Outlets Owners Association has concluded arrangements with the Dangote Petroleum Refinery to directly lift petroleum products for distribution to depots and retail outlets of PETROAN members nationwide.
PETROAN announced this on Saturday as the Port Harcourt Refining Company reportedly commenced exporting low sulphur straight-run fuel oil, with its first shipment to Dubai, United Arab Emirates.
Industry operators, however, expressed diverse views about the reported export following concerns about the refinery output since it began operations.
The PHRC officially commenced operations on Tuesday, November 26, 2024, after a series of postponements of its resumption dates by its managers — Nigerian National Petroleum Company Limited.
On Friday, PETROAN announced in a statement issued by its National Public Relations Officer, Dr Joseph Obele, that the fuel retailers had struck a deal to offtake products from the Dangote refinery after several negotiations with the $20bn Lekki-based plant.
It said the agreement, coming almost a month after the Independent Petroleum Marketers Association of Nigeria secured the first offtaking approval, guarantees the availability of petroleum products during the upcoming yuletide season.
Obele explained that the agreement was reached during a meeting with officials from the Dangote refinery on Monday, December 2, 2024.
He stated that the association reached a consensus on reserving monthly volume for PETROAN, payment modalities, and a favourable price rate.
The statement read, “The National President of PETROAN, Dr Billy Gillis-Harry, on Monday, December 2, 2024, led the negotiation team of PETROAN to a fruitful strategic business meeting with the management of Dangote refinery at the complex in Lagos.
“PETROAN is impressed with the outcome of the strategic business meeting, which was evidenced by the establishment of a seller-buyer relationship, reservation of monthly volume for PETROAN, payment modalities, and a favourable rate.
“The sealing of a transactional deal with Dangote refinery was the aftermath of a successful buyer-seller negotiation and agreement secured by PETROAN at the strategic meeting.”
PETROAN further stated its right not to reveal intricate details of the deal but expressed optimism that the general public would be the biggest beneficiary.
It added, “We reserve the right not to make public the business terms and conditions, even as we express optimism that the greatest beneficiaries in all shall be the general public as it concerns product availability and affordability.”
Continuing, the statement read, “The national headquarters of PETROAN, Abuja, has expressed confidence that the measures put in place by the association following the commencement of production at the Port Harcourt refinery and fruitful deliberations with the management of Dangote refinery will avert fuel supply shortages during and after the festive season.
“PETROAN dismisses any form of fuel scarcity concerns and cautions against panic buying as it is unsafe and dangerous to stock petroleum products at home. PETROAN also calls on stakeholders in the downstream sector to support the management of the NNPC Retail Ltd and the Dangote refinery to sustain the petroleum products supply.”
The latest development concludes several months of negotiations between both parties and is expected to increase efficiency, affordability, and economic growth.
The Dangote refinery, the largest in Africa and Europe, has already commenced the production of petrol, diesel, and aviation fuel, with plans to supply products to over 30,000 IPMAN members and 150,000 retail outlets nationwide.
This move is expected to eliminate middlemen, reduce costs, and ensure a steady supply.
P’Harcourt refinery exports
Saturday PUNCH also gathered on Friday that the newly rehabilitated Port Harcourt refinery had commenced the exportation of refined petroleum products, selling its first cargo of low sulphur straight-run fuel oil to Dubai-based Gulf Transport and Trading Limited.
A report by Kpler, a data and analysis company, stated that the refinery started up its Coolant Distribution Unit 1 this week, with its estimates pinning operations at 20,000 barrels per day.
It stated that the 60,000bpd facility, currently operating at 70 per cent capacity, sold its first low sulphur straight run fuel oil cargo, pointing to a gradual and phased start-up of operations.
The ship will load 15,000 metric tons of the product, which translates to about 13.6m litres.
The report said, “Port Harcourt sold its first LSSR cargo, with a sulphur content of 0.26 per cent wt and a 0.918 g/ml density at 15°C, to Dubai-based Gulf Transport & Trading Limited. Loading onboard the Wonder Star MR1 in the coming days. The 15,000 metric tonnes cargo, sold at a $8.50/t discount to the NWE 0.5 per cent benchmark on an FOB basis.”
While this will have a limited impact on global VLSFO benchmarks for now, the latest development changes market realities for Atlantic Basin exporters of clean products into Nigeria and the wider region.
Kpler reported that the development would help displace imports from traditional suppliers in Africa and Europe, as Nigeria’s falling clean product imports are already decreasing, dragging imports into the wider West Africa region lower as well.
It added that the LSSR was produced from the 60,000 bpd section of the refurbished Port Harcourt refinery following a November 26 announcement that it had began processing crude oil.
“LSSR production from this train is expected to steady at about 60,000 metric tonnes per month over the near term. The larger 150,000 bpd section of the refinery, however, remains offline and will start up after production from the first phase stabilises,” it noted.
Continuing, the report said a potential ramp-up to full capacity of 210,000 bpd would weigh on fuel imports to the country after Dangote’s rising refinery runs already pressured gasoline imports to multi-year lows since October.
Culled from Punch