Nigeria’s Warri Refinery has resumed operations after nearly a decade of lull, according to state-owned NNPC, and oil marketers are projecting intensified competition in the downstream sector that will force down prices of refined products.
The 125,000-barrels-per-day Warri Refining and Petrochemicals Company, Nigeria’s first wholly owned refinery commissioned in 1978, stopped operations in 2015 over issues bordering on disrepair and crude shortages, but the Nigerian National Petroleum Company Limited (NNPC) said on Monday operations have resumed.
“This plant is running. Although it is not 100 per cent complete, we are still in the process,” Group Chief Executive Officer of NNPC, Mele Kyari, said during a tour of the Warri Refinery facility with government officials, regulators and journalists.
Coming barely a month after the NNPC announced commencement of operations at the 60,000-bpd old Port Harcourt Refinery and three months after the 650,000-bpd Dangote Refinery began rolling out products, oil marketers say resumption of operations at the Warri Refinery spells better days ahead for Nigerians in terms of petroleum products pricing.
The National Operations Controller, Independent Petroleum Marketers Association of Nigeria (IPMAN), Mustapha Zarma, said following the latest development, there would now be intensified competition in the downstream oil sector that is expected to drive down prices of refined petroleum products.
“Certainly, there is going to be a further drop in prices once the facility starts pumping out products in large volumes. This is because there is going to be a lot of competition and the market will be driven by market forces at the end of the day,” he said.
Chief Executive of Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Ahmed Farouk, also said during the tour of the plant that the new refinery would lead to product abundance and availability across the country, which would invariably force down prices of petroleum products.
“It is important to note that this achievement is being enjoyed by the Nigerian public. For the first time in more than two decades, we are having the Yuletide without fuel queues and fuel all over the country,” Farouk said.
“Investors are also coming in. We now have modular refineries around the country, and they are producing gasoline and kerosene. We only have to consolidate all of these to reflect on the pricing, which we expect to still come down. The regulator intends that prices should come down with the abundance of products available across the country for the betterment of the consumer,” he said.
The Secretary of IPMAN, Abuja-Suleja, Mohammed Shuaibu, said that aside from reduction in prices of refined products, the commencement of operations at the Warri Refinery would also reduce the dollar demand for fuel imports.
Shuaibu said “with this development, the prices of refined products in Nigeria will continue to go down”.
He projected that the demand for dollars to import products would continue to drop, which would positively impact Nigeria’s foreign exchange reserves. He also factored the coming onstream of the Kaduna Refinery, which NNPC said is in the works.
“Once all the refineries begin operations, you can imagine the level of competition that will take place in the downstream oil sector. In a country with five refineries, one by Dangote and four by NNPC, the competition will be heavy and the prices of products will crash,” he said.
Already, pump prices of Premium Motor Spirit (PMS), or petrol, have dropped from a high of N1,100 at NNPC retail stations to below N1,000 currently following competition between the state-owned oil company and the privately-owned Dangote Refinery.
When Dangote Refinery started selling petrol to marketers in September, the ex-depot price was N990 per litre. In November, Dangote Refinery slashed the price to N970, and on Thursday, December 19, it announced a further slash to N899.50, prompting marketers to sell the product at N935 per litre.
The NNPC also reduced the ex-depot price of petrol at the Port Harcourt Refinery to N899 for oil marketers, from the previous price of N1,020 per litre.
