Introduction
The war in Russia and Ukraine is contributing to the fuel scarcity in Nigeria. This is a crisis the Government of Nigeria is living in denial to admit and tell the truth about. The current fuel scarcity may have started with the importation of adulterated petrol but the Nigerian National Petroleum Company Ltd (NNPC) provided that it was only 100 million litres of petrol that was imported which is just about two days consumption. But the scarcity has persisted for a month and counting so it is not possible that a disruption in supply for a day or two will cause a month-long crisis which is yet to abate.
The truth which the Government of Nigeria will not confess to is that global supplies of crude and petroleum products are being impacted by the war in Russia and Ukraine. According to Reuters, Russia exports around 7 million barrels of oil per day, or 7% of global supply. The International Energy Agency (IEA) states that Russia is the world’s largest exporter of oil to global markets and the second largest crude oil exporter behind Saudi Arabia. As a fallout from the Russian invasion of Ukraine, global oil companies have announced their exit from Russia including BP who exited their 30-year partnership with Russian company Rosneft with a financial hit of $ 25 billion which was followed almost immediately by Shell who exited all its Russian operations, including a major liquefied natural gas plant with non-current assets worth about $3 billion according to Reuters. When such a major oil supplier like Russia is ostracised by the market, it is bound to cause disruptions in global oil dynamics. When it comes to oil, anytime Russia sneezes the world catches cold which is afflicting Nigeria badly whether the Government wants to admit it or not!
But Nigeria has itself alone to blame for allowing the downstream sector of the petroleum industry to rot thus hanging the country dangerously at the mercy of suppliers of petroleum products. It is unfathomable why a major global supplier of crude oil like Nigeria will not refine her crude oil – Nigeria is the only major oil producer that is refining zero barrels and depending 100% on imported petroleum products. If the leaders of Nigeria had not before now calculated the risk of a major global event (like COVID which grounded all flights or a shipping blockade) that will prevent ships to sail and Nigeria is left with no petroleum products for weeks or months and the catastrophe it will cause to our economy, wellbeing and existence, then this Russia-Ukraine war must serve as a wake-up call!
The current fuel crisis has also exposed the NNPC that they do not keep strategic reserves of petroleum products. Global strategic petroleum reserves (GSPR) refer to crude oil inventories (or stockpiles) held by the government of a particular country, as well as private industry, to safeguard the economy and help maintain national security during an energy crisis. Strategic reserves are intended to be used to cover short-term supply disruptions. The current fuel crisis has revealed that Nigeria is perhaps the only oil major that is not keeping GSPR.
Nigeria only recently signed a petroleum industry bill when the world is switching to renewable energy which again shows a country steeped into the past refusing to move along with the world. Then the news broke in the last few days that Nigeria is about committing to nuclear power again a source of power that the world is moving away from. With abundant renewable sources – water, wind, sun, waves, biomass – it is incomprehensible why Nigeria’s leaders are not tapping into these low-hanging fruits to power the economy but instead are either looking to dirty fossil fuels or high-risk nuclear power.
Recommendations
1. The Government of Nigeria must take immediate steps to achieve petroleum products refining sufficiency and independence by leasing or selling the 4 refineries operated by the NNPC.
2. The Government must take seriously renewable energy by changing the name and remit of the NNPC to Nigerian National Energy Company Ltd (NNEC) with a firm focus on renewables and perhaps gas as a transition fuel.
3. Nigerian Government must take immediate steps to keep Global strategic petroleum reserves (GSPR) to ensure supply security in the crisis situations as currently faced with the global supply disruptions resulting from the Russia-Ukraine war.
4. The Nigerian Government must immediately without any further delays create the enabling environment for private sector participation in the downstream sector of the petroleum industry. There has never been a day Nigeria was unable to produce crude oil which requires a far greater degree of expertise, money and technology because the private sector is running the sector. But just to refine which is nothing more than to cook (heat) the crude and collect varying petroleum products at the different levels of temperature, a government controlled NNPC cannot do it. Same Government controlled entities cannot provide power! Nigerian Liquified Natural Gas Limited (NLNG) a government owned but privately run gas company is doing excellently well and paying dividends in billions of dollars to government coffers something the NNPC has not done since inception! So examples abound of the private sector running business better than government and the downstream sector will thrive under private ownership and/or management.
On this 8th Day of March, this column wishes and felicitates with our womenfolk on the International Women’s Day. A country where a male citizen marries a foreign wife and she is granted citizenship but a female citizen who marries a foreign husband is denied citizenship must change and very swiftly too.
References:
https://www.reuters.com/business/energy/oil-spikes-2008-highs-us-europe-mull-russian-oil-import-ban-iran-delay-2022-03-07/
https://www.iea.org/reports/russian-supplies-to-global-energy-markets/oil-market-and-russian-supply-2
https://www.reuters.com/business/energy/britains-bp-says-exit-stake-russian-oil-giant-rosneft-2022-02-27/
https://en.wikipedia.org/wiki/Global_strategic_petroleum_reserves
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