BRUSSELS, SEPTEMBER 22, 2017 – Nigeria’s efforts to cut sulphur levels in its fuel imports are unlikely to succeed this year, the head of a major Nigerian downstream company told the Platts refining conference in Brussels.
The government has delayed its target to slash allowed sulphur on imports to 50 parts per million (ppm) for diesel and 150 ppm for gasoline from July to December, but Rainoil managing director Gabriel Ogbechie said the chances of meeting the fresh deadline are nil.
“I don’t see that happening,” Ogbechie said.
The current maximum sulphur level is 1,000 ppm for gasoline and 3,000 ppm for diesel.
Rainoil, an integrated downstream oil and gas company, holds a contract for crude-for-fuels swaps, which have been the main source for the country’s gasoline imports in the past two years.
Prices for lower sulphur fuels were included in those contracts, but Ogbechie said that as long as the government caps gasoline prices, it will not opt for higher quality fuel that would cost $10-$20 more per tonne.
“That’s an extra $300,000-$600,000 per cargo. Is the government ready to absorb that cost? The answer today is no,” he said.
He added that the government should deregulate fuel prices, which would enable it to increase quality without shouldering the cost, but noted that with elections coming in early 2019 any such move was also unlikely.
“The price of petroleum products is a highly emotive issue…and the election cycle has already started.”