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EU embargo on Russia to extend fuel scarcity in Nigeria despite Dangote refinery debut



Increase in petrol price inevitable –Rewane

Nigeria’s current fuel scarcity might extend into 2024, as S&P Global Commodity Insight has disclosed that the Dangote refinery, slated for the fourth quarter of 2023, would not save the country from the looming global fuel scarcity.

S&P, a global research firm, in a report obtained by Ripples Nigeria on Monday, said the readiness of the country to have substantial refined fuel is dependent on the Dangote refinery coming on stream. Still, even after the operation commences, it will not reach its 650,000 production capacity at the end of 2024.

So, while the refinery will enable Nigeria to refine some of its products in the country, the largest crude oil producer will still be largely dependent on European countries to meet its fuel consumption needs.

However, the dependency on European countries might be affected by the European Union (EU) embargo slammed on Russian oil, which is the major supplier to the European continent.

The embargo will cut the volume of oil supplied to the European continent – where Russia’s oil and gas previously accounted for about 40 per cent or half of Vladimir Putin’s total commodity – as a result, the volume of refined oil for export out of EU nations to the global market and Nigeria will drop.

In response, the current fuel scarcity in Nigeria will linger, as NNPC, the sole importer of fuel into the African nation, will have lesser fuel to import.

Read also:Naira, fuel scarcity contrived to stop Tinubu from becoming president —Gbajabiamila

In the report titled; “Africa energy review and outlook 2022-23: Turbulence on the road to recovery”, S&P stated, “On the supply side, Sub-Saharan Africa lacks sufficient refining capacity and therefore is highly dependent on imports. In particular, the region needs to import nearly 700,000 b/d of diesel, which is 80% of its needs.

“This gap has grown considerably since 2020 when a wave of refinery closures swept the region and slashed domestic supply. Most notably, in 2022 South Africa lost the third of its five refineries; consequently, only 35% of its refining capacity is operational. There is a possibility for additional domestic supply in the immediate term, but this hinges on the restart of South Africa’s Astron refinery.

“Nigeria’s Dangote refinery, once online, is expected to provide substantial additional volumes that will relieve pressure from supply constraints across the region.

“But the giant greenfield refinery still has a ways to go. It is expected to come onstream only after the fourth quarter of 2023 and not reach full capacity before the end of 2024.

“Moreover, in 2023 the global market is forecast to remain tight, with disruptions anticipated owing to the expected embargo on Russian exports,” the report reads.

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