INTRODUCTION: The abrupt January 1 2012 subsidy removal in Nigeria, now increasingly dubbed "de-regulation in the downstream petroleum industry," is posing new challenges both to the Nigerian citizenry (in terms of direct increase in fuel price, transportation and of other essential commodities due to the impact of the petrol "macro-product") and to the Federal Government (in terms of protests from various sectors of civil society).
The coming days and weeks will be crucial in determining where the pendulum will swing over the issue. The coming months and years will also see whether private investors will come rushing into the downstream sector, because without a national consensus, private money tends to bide its time, fearing future policy reversals.
SOME BACKGROUND INFORMATION
According to reliable information, Nigeria's petroleum products consumption pattern is heavily weighted towards Gasoline (PMS Premium Motor Spirit), which takes up almost 80%, with Diesel (AGO Automotive Gas Oil) almost 10% and Kerosene (House-hold Kerosene HHK and Aviation Turbine Kerosene ATK) about 10%. (See Table 1.) There is also the data (see Figure 1) to show that our daily crude oil demand in Nigeria is actually less that 300,000 barrels per day, and that the actual figure could be as low as 215,000 bpd but probably no more than 275,000 bpd at this time.
When we note that Nigeria is an oil-producing country with 2.5 million barrels per day of production, endowed with valuable "sweet" crude (see Table 2), then refining only 12% of our oil would fulfil our local demands. It would also be wise to increase that refining capacity to 20-50% for local consumption expansion and regional and global export purposes.
On that score, Nigeria has three complex oil refineries (in Kaduna, Warri and Port Harcourt (with two complexes)), with a total name-plate capacity of 445,000 barrels per day only, and with theoretically favorable product yields structure (see Tables 3a, 3b and 3c). What that means is that if these refineries could run at only 70% efficiency, they would supply more than our daily needs. Alas, for the past ten years, none of the refineries has ever run above 61% if at all, often running significantly less than half of that figure, and averaging about 30% in those ten years (See Table 4.)
What the above information means is that in order to meet our daily needs, Nigeria has had to import on average 40% of our daily needs for petroleum products, and sometimes as high as 80-90% - which is a huge net drain on our foreign reserves, bearing in mind that we first have to sell and transport the crude abroad, refine it there, transport the refined products back, with freight and insurance charges, port/demurrage costs, etc., all with margin charges as well as hidden transaction (and corruption) costs.
Which brings us all to the vexing question of fuel subsidy. Government, defining it as the difference between the landing cost of imported fuel and the government-fixed pump price (for example N141 - N65 = N76 per liter for PMS, and N148.98-N50 = N98.98 for HHK), says it can no longer afford it (at least for PMS), therefore abruptly discontinuing it effective January 1, 2012. (See new PPPRA Table 5 below).
Based on a 76:6 volume ratio of PMS:HHK consumption estimate (see Table 1), and the disclosure that N1.4 trillion (N1,400,000 million) was spent in 2011, that roughly comes to unverified amounts of 16,700 million liters of PMS per year and 1,300 million liters of HHK per year - or about 46 million liters per day of PMS and 3.6 million liters per day of HHK. If it is the often stated consumption of 32 million liters per day of PMS that we were paying for, then that would mean 14 million liters per day of HHK.
SOME NAGGING QUESTIONS
These latest calculations bring to mind four more vexing questions that need to be fully addressed before this pill of fuel subsidy removal can be "sweetened", trust (re-)established between the "governors" and the governed, and confidence built:
1. Were these fuel consumption estimates real or imagined - that is, the PMS (46 million or 32 million liters?) and HHK (3.6 million or 14 million liters?) consumptions ? Or did the subsidy collectors - those 100+ companies of Majors, Petrol Depot Owners and Independent Marketers and Road Construction Companies (see summary in Table 7) - merely quote figures for which the federal government paid up, or were there credible checks on the actual amount of petroleum product delivered?
2. If not, is there a refund possible, particularly from those subsidy collectors who illegally used their HHK allocation as asphalt cutback for road construction? Or will we just allow the manipulators of the system get away with impunity, when they have been identified so publicly, and make the Nigerian masses to suffer the consequences of inflated subsidy now being removed?
3. With PMS price previously set at N65 per liter and HHK at N50 per liter, should we have, as an oil-producing nation, despite being forced by refining incompetence (or sabotage?) to import products, been subtracting these figures from international prices of N141 and N148.98 respectively, or should we not be comparing them with the much less local prices as given for example in Table 6 - between N35 per liter to N65 per liter by some estimates, with the concomitant argument that there is in fact no subsidy? Can we come to some agreement on these figures, as part of the confidence-building measures?
4. why can't we just simply make one or more of our refineries work (as a national emergency commitment) to almost maximum capacity first before phasing out the subsidy removal, preferably on a quarterly basis? Should that not be a major focus of the SURE (Subsidy Reinvestment and Empowerment) program, at least from the federal government angle?
5. why can't we begin to ensure that the fore-gone SURE money - rather than being allocated according to the usual Federal Account Allocation Committee (FAAC) formula - be considered a SPECIAL INTERVENTION Fund at least for the next five years and distributed as shown in Tables 8 and 9, with specifications of 70% for INFRASTRUCTURE and 30% for SOCIAL SAFETY NET? Then we assign SPECIFIC tasks to the various tiers of government based on their best readiness/appropriateness to intervene - rather than having the federal government do EVERYTHING and the lower tiers do NOTHING IN PARTICULAR - and use objective measures (population, area) to allocate the money? Then there would be greater possibility of holding all tiers of government accountable, particularly if furthermore monitoring boards are set up at the federal, state and local government levels - - not just one federal board, as recently announced to be led by Dr. Christopher Kolade - comprised more of civil society members than government officials , which bureaucracy can be paid for by some of the N31.37 billion SURE money currently allocated to "Transfer" . These boards would ensure "adequate oversight, accountability and implementation of the various projects" etc. as suggested in the FGN's SURE program document.
These are questions begging for answers, with those answers blowing in the wind.
Have a Happier New Year.
TABLE 1: NIGERIA’S PETROLEUM PRODUCTS CONSUMPTION PATTERN (2009)
(After E.J. Omonbude, NAEE Conference, Abuja, 2011)
S/N
Fuel Type
Fuel Type
Abbreviation
%
1
Premium Motor Spirit (Gasoline)
PMS
76
2
Automotive Gas Oil (Diesel)
AGO
9
3
Aviation Turbine Kerosene
ATK
6
4
House-Hold Kerosene
HHK
6
5
Low Pour Fuel Oil
LPFO
2
6
Liquefied Petroleum Gas
LPG
0
7
Others….
Others
1
Total
100
TABLE 2: NIGERIA’S CRUDE AND THEIR CHARACTERIZATIONS
http://en.wikipedia.org/wiki/List_of_crude_oil_products
S/N
Product name
API gravity
Sulfur content
(as % of mass)
1
Agbami
47.2°
0.044%
2
Amenam Blend
38.2°
0.12%
3
Amenam/Mars Blend
33.5°
0.94%
4
Antan Blend
26.4°
0.27%
5
Bonga
29.1
0.26%
6
Bonny Light
33.4°
0.16%
7
Brass River
n.a.
0.14%
8
EA Crude
35.1°
0.08%
9
Erha
31.8°
0.21%
10
Escravos
34.2°
0.17%
11
Forcados (to Europe)
30.8°
0.16%
Mixed Blend Sweet
12
Odudu
30.5°
0.15%
13
Okono
41.9°
0.06%
14
Oso Condensate
45.7°
0.06%
15
Pennington
35°
0.08%
16
Qua Iboe
36.3°
0.14%
17
Ukpokiti
41.7°
0.08%
18
Yoho Crude
39.3°
0.08%
WORLD CRUDE STANDARDS
1
Brent Blend (UK)
38.3°
0.37%
2
West Texas Intermediate (USA)
39.6°
0.24%
*Note: Light crude: API>34, medium 31 < API < 33; heavy < 30; Sweet crude: Sulfur < 0.5 wt. %; Sour: Sulfur > 1.0 wt. %
TABLE 3a: NIGERIA's REFINERY YIELDS FROM MEDIUM CRUDE
(After E.J. Omonbude, NAEE Conference, Abuja, 2011)
S/N
Fuel Type
Simple
Refinery
Complex
Refinery
Very Complex
Refinery
1
Gasoline
30
50
60
2
Jet Fuel
10
10
10
3
Distillate Fuel
20
25
25
4
Residual Fuel
35
10
0
5
LPG
0
3
4
6
Coke
0
0
3
7
Refinery Fuel
8
12
13
Total
103
110
115
Table 3b:
Refinery product yields vary from different parts of the USA
http://www.petrostrategies.org/Learning_Center/Refining.htm
U.S. Refinery Yields , Percentage of Crude Oil Charge
Product
PADD I
East
Coast
PADD II
Midwest
PADD III
Southwest
PADD IV
Rocky Mountains
PADD V
West Coast
Total US
LPGs
1.9
2.4
4.6
0.4
1.3
3.2
Gasoline
45.5
50.8
43.6
46.7
47.0
46.0
Jet Fuel
4.8
7.2
11.7
7.3
16.1
10.6
Distillate Fuel Oil
31.2
26.7
23.8
28.7
19.6
24.7
Residual Fuel Oil
8.6
2.3
5
1.9
6.4
5.0
Other
13.0
15.7
18.2
18.9
16.0
16.6
Total
105.0
105.1
106.9
103.9
106.4
106.1
Source: EIA, Petroleum Supply Monthly, February 2001, Table 31.
Table 3c: What Does One Barrel Of Crude Oil Make?
http://www.greensborogasprices.com/crude_products.aspx
- One barrel of crude oil contains 42 gallons; 1 gallon is 3.785 liters
- About 46% of each barrel of crude oil is refined into automobile gasoline
- In the US and Canada an average of 3 gallons of crude oil are consumed per person each day
- The US imports about 50% of its required crude oil and about 50% of that amount comes from OPEC countries
Product
Refined Gallons
/Barrel
Refined Liters
/Barrel
Barrel/Barrel
(%)
Gasoline
19.3
73.05
46
Distillate Fuel Oil
(Inc. Home Heating and Diesel Fuel)
9.83
37.21
23
Kerosene Type Jet Fuel
4.24
16.05
10
Residual Fuel Oil
2.10
7.95
5
Petroleum Coke
2.10
7.95
5
Liquified Refinery Gases
1.89
7.15
4.5
Still Gas
1.81
6.85
4.3
Asphalt and Road Oil
1.13
4.28
2.7
Petrochemical Feed Supplies
0.97
3.67
2.3
Lubricants
0.46
1.74
1.1
Kerosene
0.21
0.79
0.5
Waxes
0.04
0.15
0.1
Aviation Fuel
0.04
0.15
0.1
Other Products
0.34
1.29
0.8
Total
44.46
168.28
105.4
Processing Gain
2.47
9.35
5.4
Source: EIA March 2004 Data
FIGURE 1: Total Oil Consumption in Nigeria (Omonbude, 2011)
Table 4: Refinery Operating Efficiencies – 2001-2011
(Source: NNPC’s Annual Statistical Bulletin)
S/N
Year
Kaduna
%
Warri
%
Port Harcourt
%
Total/Avg
%
Name-Plate Capacity bpd
110,000
125,000
210,000
445,000
1
2001
31.39
48.29
60.73
49.98
2
2002
34.95
55.53
52.17
48.86
3
2003
15.96
14.27
41.88
27.72
4
2004
26.00
9.10
31.04
23.63
5
2005
33.08
54.85
42.18
43.49
6
2006
8.34
3.85
50.26
26.86
7
2007
0.00
0.00
24.87
11.74
8
2008
19.56
38.52
17.84
24.07
9
2009
20.02
43.01
9.08
21.32
10
2010
20.46
43.36
9.17
21.56
Avg 2001-2010
20.97
31.08
33.92
29.92
11
Q1 2011 (Jan-March)
9.02
24.93
11.94
14.87
12
Q2 2011 (April-June)
27.78
38.40
16.87
25.61
Table 5: New Petroleum Products Regime in Nigeria
See: http://www.pppra-nigeria.org/
1st January - 15th January, 2012
Products (per litre)
PMS
AGO
HHK
ATK
LPFO
Landing Cost + Other Charges
131.66
149.15
148.98
143.50
111.16
Ex-Depot
40.66
Maximum Indicative Benchmark Depot Price
131.66
Margins
9.34
9.34
9.34
9.65
11.16
Expected Open Market Price
143.02
50.00
153.15
122.87
Maximum Indicative Benchmark Open Market Price
141.00
Table 6: International vs. Local Prices for Crude and Refined Products
S/N
Item
Breakdown
Costs
N/liter
KSA *(Abdullahi)
Cost
1
N/liter
Cost
2
N/liter
Cost
3
N/liter
Comment
Cost
4
Breakdown
Costs
N/liter
IA (Agbon)*
Cost
5
1a
Exploration
0.02
0
1b
Development
22.64
5.03
1c
Operation
2.83
0
Subtotal
25.49
5.03
1d
Add 5.25% losses
1.34
0
1
Total Cost of Crude Oil
26.83
26.83
100
Costs 1, 2 &4 based
on 1a-1d (Local pricing);
Costs 3 & 5 based on international pricing
5.03
100
2
Refining
25.36
25.36
25.36
12.68
12.68
3
Distribution
2.42
13.20
13.20
Cost 1 for Items 3 and 4 based
on 2005 info;
Cost 2 & 3 for Items 3 and 4 based on 2011 info
17.31
17.31
4
Marketing
5.87
0
0
0
0
5
Tax
0
0
0
5.00
18.56
Total
60.48
65.39
138.56
40.02
148.55
*KSA stands for Kasim Sulaiman Abdullahi; see http://www.facebook.com/permalink.php?story_fbid=303255423046329&id=111678125537394 "Economics of Crude Oil Refining and Marketing in Nigeria"
IA stands for Izielen Agbon: see http://saharareporters.com/article/real-cost-nigeria-petrol-dr-izielen-agbon "The Real Cost of Nigerian Petrol"
TABLE 7: FUEL SUBSIDY BENEFICIARIES’ NUMBERS BY YEAR
S/N
YEAR
TOTAL
NUMBER
NAMES
1
2006
3
Majors: MRS, Total and Oando
2
2007
8
Add 5:
Majors: AP and Mobil
Petrol Depot Owners: NIPCO
Independent Marketers: AITEO Energy Resources and Triquest
3
2008
23
Add 15:
Major: Conoil
Petrol Depot Owners: Capital Oil, Folawiyo Energy
Independent Marketers: Triquest Oil Services, IMAD Oil & Gas,
Integrated Oil and Gas, Rahamaniyya, AMG, Petro Energy,
Brittania, ACORN, A-Z Petrolleum, SHIELD Petroleum,
MAJOPE Investment Limited
4
2010
36
Majors: 6
Petrol Depot Owners: 2
Independent Marketers: 28
5
2011
100+?
Majors, Petrol Depot Owners, Independent Marketers & Road Construction Companies?
TABLE 8: SUGGESTED DISTRIBUTION (Based on Greater Emphasis on Infrastructure, and De-Emphasis on Derivation in FAAC Allocation)
S/N
TIER OF GOVERNMENT
INFR.
SOC. SAF. NET
AMOUNT
(Naira, Billion)
%
Current SURE
Distribution
%
1
Federal + FCT
493.97
79.38
573.35
51%
488.35
43%
2
State
138.93
125.70
264.63
23%
411.03
36%
3
Local
138.93
125.70
264.63
23%
203.23
18%
Sub-Total
771.83
330.78
1102.61
97%
1102.61
97%
5
Transfers
31.37
3%
31.37
3%
Total
1133.98
100.00%
1133.98
100.00%
TABLE 9: SUGGESTED ALTERNATIVE SURE MONEY DISTRIBUTION – TIER-BY-TIER, PROGRAM-BY-PROGRAM
S/N
EXPENDITURE ITEM
Federal
State
Local+FCT
Total
(i) SOCIAL SAFETY NETS:
1
Maternal and child health services,
-
-
125.70
125.70
2
Public works/youth employment programme
52.92
-
-
52.92
3
Urban mass transit scheme
-
125.70
-
125.70
4
Vocational training schemes
26.46
-
-
26.46
Sub-Total, Social Safety Net
79.38
125.70
125.70
330.78
(ii) INFRASTRUCTURE
5
Roads and Rail
164.66
(rail)
46.31
(roads)
-
210.97
6
Water Resources
-
-
138.93
138.93
7
Refineries
329.31
-
-
329.31
8
Power
-
92.62
-
92.62
Sub-Total, Infrastructure
493.97
138.93
138.93
771.83
Grand Total
573.35
264.63
264.63
1102.61
INTRODUCTION: The abrupt January 1 2012 subsidy removal in Nigeria, now increasingly dubbed "de-regulation in the downstream petroleum industry," is posing new challenges both to the Nigerian citizenry (in terms of direct increase in fuel price, transportation and of other essential commodities due to the impact of the petrol "macro-product") and to the Federal Government (in terms of protests from various sectors of civil society). The coming days and weeks will be crucial in determining where the pendulum will swing over the issue. The coming months and years will also see whether private investors will come rushing into the downstream sector, because without a national consensus, private money tends to bide its time, fearing future policy reversals.
SOME BACKGROUND INFORMATION
According to reliable information, Nigeria's petroleum products consumption pattern is heavily weighted towards Gasoline (PMS Premium Motor Spirit), which takes up almost 80%, with Diesel (AGO Automotive Gas Oil) almost 10% and Kerosene (House-hold Kerosene HHK and Aviation Turbine Kerosene ATK) about 10%. (See Table 1.) There is also the data (see Figure 1) to show that our daily crude oil demand in Nigeria is actually less that 300,000 barrels per day, and that the actual figure could be as low as 215,000 bpd but probably no more than 275,000 bpd at this time.
When we note that Nigeria is an oil-producing country with 2.5 million barrels per day of production, endowed with valuable "sweet" crude (see Table 2), then refining only 12% of our oil would fulfil our local demands. It would also be wise to increase that refining capacity to 20-50% for local consumption expansion and regional and global export purposes.
On that score, Nigeria has three complex oil refineries (in Kaduna, Warri and Port Harcourt (with two complexes)), with a total name-plate capacity of 445,000 barrels per day only, and with theoretically favorable product yields structure (see Tables 3a, 3b and 3c). What that means is that if these refineries could run at only 70% efficiency, they would supply more than our daily needs. Alas, for the past ten years, none of the refineries has ever run above 61% if at all, often running significantly less than half of that figure, and averaging about 30% in those ten years (See Table 4.)
What the above information means is that in order to meet our daily needs, Nigeria has had to import on average 40% of our daily needs for petroleum products, and sometimes as high as 80-90% - which is a huge net drain on our foreign reserves, bearing in mind that we first have to sell and transport the crude abroad, refine it there, transport the refined products back, with freight and insurance charges, port/demurrage costs, etc., all with margin charges as well as hidden transaction (and corruption) costs.
Which brings us all to the vexing question of fuel subsidy. Government, defining it as the difference between the landing cost of imported fuel and the government-fixed pump price (for example N141 - N65 = N76 per liter for PMS, and N148.98-N50 = N98.98 for HHK), says it can no longer afford it (at least for PMS), therefore abruptly discontinuing it effective January 1, 2012. (See new PPPRA Table 5 below).
Based on a 76:6 volume ratio of PMS:HHK consumption estimate (see Table 1), and the disclosure that N1.4 trillion (N1,400,000 million) was spent in 2011, that roughly comes to unverified amounts of 16,700 million liters of PMS per year and 1,300 million liters of HHK per year - or about 46 million liters per day of PMS and 3.6 million liters per day of HHK. If it is the often stated consumption of 32 million liters per day of PMS that we were paying for, then that would mean 14 million liters per day of HHK.
SOME NAGGING QUESTIONS
These latest calculations bring to mind four more vexing questions that need to be fully addressed before this pill of fuel subsidy removal can be "sweetened", trust (re-)established between the "governors" and the governed, and confidence built:
1. Were these fuel consumption estimates real or imagined - that is, the PMS (46 million or 32 million liters?) and HHK (3.6 million or 14 million liters?) consumptions ? Or did the subsidy collectors - those 100+ companies of Majors, Petrol Depot Owners and Independent Marketers and Road Construction Companies (see summary in Table 7) - merely quote figures for which the federal government paid up, or were there credible checks on the actual amount of petroleum product delivered?
2. If not, is there a refund possible, particularly from those subsidy collectors who illegally used their HHK allocation as asphalt cutback for road construction? Or will we just allow the manipulators of the system get away with impunity, when they have been identified so publicly, and make the Nigerian masses to suffer the consequences of inflated subsidy now being removed?
3. With PMS price previously set at N65 per liter and HHK at N50 per liter, should we have, as an oil-producing nation, despite being forced by refining incompetence (or sabotage?) to import products, been subtracting these figures from international prices of N141 and N148.98 respectively, or should we not be comparing them with the much less local prices as given for example in Table 6 - between N35 per liter to N65 per liter by some estimates, with the concomitant argument that there is in fact no subsidy? Can we come to some agreement on these figures, as part of the confidence-building measures?
4. why can't we just simply make one or more of our refineries work (as a national emergency commitment) to almost maximum capacity first before phasing out the subsidy removal, preferably on a quarterly basis? Should that not be a major focus of the SURE (Subsidy Reinvestment and Empowerment) program, at least from the federal government angle?
5. why can't we begin to ensure that the fore-gone SURE money - rather than being allocated according to the usual Federal Account Allocation Committee (FAAC) formula - be considered a SPECIAL INTERVENTION Fund at least for the next five years and distributed as shown in Tables 8 and 9, with specifications of 70% for INFRASTRUCTURE and 30% for SOCIAL SAFETY NET? Then we assign SPECIFIC tasks to the various tiers of government based on their best readiness/appropriateness to intervene - rather than having the federal government do EVERYTHING and the lower tiers do NOTHING IN PARTICULAR - and use objective measures (population, area) to allocate the money? Then there would be greater possibility of holding all tiers of government accountable, particularly if furthermore monitoring boards are set up at the federal, state and local government levels - - not just one federal board, as recently announced to be led by Dr. Christopher Kolade - comprised more of civil society members than government officials , which bureaucracy can be paid for by some of the N31.37 billion SURE money currently allocated to "Transfer" . These boards would ensure "adequate oversight, accountability and implementation of the various projects" etc. as suggested in the FGN's SURE program document. These are questions begging for answers, with those answers blowing in the wind.
Have a Happier New Year.
TABLE 1: NIGERIA’S PETROLEUM PRODUCTS CONSUMPTION PATTERN (2009)
(After E.J. Omonbude, NAEE Conference, Abuja, 2011)
S/N
Fuel Type
Fuel Type
Abbreviation
%
1
Premium Motor Spirit (Gasoline)
PMS
76
2
Automotive Gas Oil (Diesel)
AGO
9
3
Aviation Turbine Kerosene
ATK
6
4
House-Hold Kerosene
HHK
6
5
Low Pour Fuel Oil
LPFO
2
6
Liquefied Petroleum Gas
LPG
0
7
Others….
Others
1
Total
100
TABLE 2: NIGERIA’S CRUDE AND THEIR CHARACTERIZATIONS
http://en.wikipedia.org/wiki/List_of_crude_oil_products
S/N
Product name
API gravity
Sulfur content
(as % of mass)
1
Agbami
47.2°
0.044%
2
Amenam Blend
38.2°
0.12%
3
Amenam/Mars Blend
33.5°
0.94%
4
Antan Blend
26.4°
0.27%
5
Bonga
29.1
0.26%
6
Bonny Light
33.4°
0.16%
7
Brass River
n.a.0.14%
8
EA Crude
35.1°
0.08%
9
Erha
31.8°
0.21%
10
Escravos
34.2°
0.17%
11
Forcados (to Europe)
30.8°
0.16%
Mixed Blend Sweet
12
Odudu
30.5°
0.15%
13
Okono
41.9°
0.06%
14
Oso Condensate
45.7°
0.06%
15
Pennington
35°
0.08%
16
Qua Iboe
36.3°
0.14%
17
Ukpokiti
41.7°
0.08%
18
Yoho Crude
39.3°
0.08%
WORLD CRUDE STANDARDS
1
Brent Blend (UK)
38.3°
0.37%
2
West Texas Intermediate (USA)
39.6°
0.24%
*Note: Light crude: API>34, medium 31 < API < 33; heavy < 30; Sweet crude: Sulfur < 0.5 wt. %; Sour: Sulfur > 1.0 wt. %
TABLE 3a: NIGERIA's REFINERY YIELDS FROM MEDIUM CRUDE
(After E.J. Omonbude, NAEE Conference, Abuja, 2011)
S/N
Fuel Type
Simple
Refinery
Complex
Refinery
Very Complex
Refinery
1
Gasoline
30
50
60
2
Jet Fuel
10
10
10
3
Distillate Fuel
20
25
25
4
Residual Fuel
35
10
0
5
LPG
0
3
4
6
Coke
0
0
3
7
Refinery Fuel
8
12
13
Total
103
110
115
Table 3b:
Refinery product yields vary from different parts of the USA
http://www.petrostrategies.org/Learning_Center/Refining.htm
U.S. Refinery Yields , Percentage of Crude Oil Charge
Product
PADD I
East
Coast
PADD II
Midwest
PADD III
Southwest
PADD IV
Rocky Mountains
PADD V
West Coast
Total US
LPGs
1.9
2.4
4.6
0.4
1.3
3.2
Gasoline
45.5
50.8
43.6
46.7
47.0
46.0
Jet Fuel
4.8
7.2
11.7
7.3
16.1
10.6
Distillate Fuel Oil
31.2
26.7
23.8
28.7
19.6
24.7
Residual Fuel Oil
8.6
2.3
5
1.9
6.4
5.0
Other
13.0
15.7
18.2
18.9
16.0
16.6
Total
105.0
105.1
106.9
103.9
106.4
106.1
Source: EIA, Petroleum Supply Monthly, February 2001, Table 31.
Table 3c: What Does One Barrel Of Crude Oil Make?
http://www.greensborogasprices.com/crude_products.aspx
- One barrel of crude oil contains 42 gallons; 1 gallon is 3.785 liters
- About 46% of each barrel of crude oil is refined into automobile gasoline
- In the US and Canada an average of 3 gallons of crude oil are consumed per person each day
- The US imports about 50% of its required crude oil and about 50% of that amount comes from OPEC countries
Product
Refined Gallons
/Barrel
Refined Liters
/Barrel
Barrel/Barrel
(%)
Gasoline
19.3
73.05
46
Distillate Fuel Oil
(Inc. Home Heating and Diesel Fuel)
9.83
37.21
23
Kerosene Type Jet Fuel
4.24
16.05
10
Residual Fuel Oil
2.10
7.95
5
Petroleum Coke
2.10
7.95
5
Liquified Refinery Gases
1.89
7.15
4.5
Still Gas
1.81
6.85
4.3
Asphalt and Road Oil
1.13
4.28
2.7
Petrochemical Feed Supplies
0.97
3.67
2.3
Lubricants
0.46
1.74
1.1
Kerosene
0.21
0.79
0.5
Waxes
0.04
0.15
0.1
Aviation Fuel
0.04
0.15
0.1
Other Products
0.34
1.29
0.8
Total
44.46
168.28
105.4
Processing Gain
2.47
9.35
5.4
Source: EIA March 2004 Data
FIGURE 1: Total Oil Consumption in Nigeria (Omonbude, 2011)
Table 4: Refinery Operating Efficiencies – 2001-2011
(Source: NNPC’s Annual Statistical Bulletin)
S/N
Year
Kaduna
%
Warri
%
Port Harcourt
%
Total/Avg
%
Name-Plate Capacity bpd
110,000
125,000
210,000
445,000
1
2001
31.39
48.29
60.73
49.98
2
2002
34.95
55.53
52.17
48.86
3
2003
15.96
14.27
41.88
27.72
4
2004
26.00
9.10
31.04
23.63
5
2005
33.08
54.85
42.18
43.49
6
2006
8.34
3.85
50.26
26.86
7
2007
0.00
0.00
24.87
11.74
8
2008
19.56
38.52
17.84
24.07
9
2009
20.02
43.01
9.08
21.32
10
2010
20.46
43.36
9.17
21.56
Avg 2001-2010
20.97
31.08
33.92
29.92
11
Q1 2011 (Jan-March)
9.02
24.93
11.94
14.87
12
Q2 2011 (April-June)
27.78
38.40
16.87
25.61
Table 5: New Petroleum Products Regime in Nigeria See: http://www.pppra-nigeria.org/
1st January - 15th January, 2012
Products (per litre)
PMS
AGO
HHK
ATK
LPFO
Landing Cost + Other Charges
131.66
149.15
148.98
143.50
111.16
Ex-Depot
40.66
Maximum Indicative Benchmark Depot Price
131.66
Margins
9.34
9.34
9.34
9.65
11.16
Expected Open Market Price
143.02
50.00
153.15
122.87
Maximum Indicative Benchmark Open Market Price
141.00
Table 6: International vs. Local Prices for Crude and Refined Products
S/N
Item
Breakdown
Costs
N/liter
KSA *(Abdullahi)
Cost
1
N/liter
Cost
2
N/liter
Cost
3
N/liter
Comment
Cost
4
Breakdown
Costs
N/liter
IA (Agbon)*
Cost
5
1a
Exploration
0.02
0
1b
Development
22.64
5.03
1c
Operation
2.83
0
Subtotal
25.49
5.03
1d
Add 5.25% losses
1.34
0
1
Total Cost of Crude Oil
26.83
26.83
100
Costs 1, 2 &4 based
on 1a-1d (Local pricing);
Costs 3 & 5 based on international pricing
5.03
100
2
Refining
25.36
25.36
25.36
12.68
12.68
3
Distribution
2.42
13.20
13.20
Cost 1 for Items 3 and 4 based
on 2005 info;
Cost 2 & 3 for Items 3 and 4 based on 2011 info
17.31
17.31
4
Marketing
5.87
0
0
0
0
5
Tax
0
0
0
5.00
18.56
Total
60.48
65.39
138.56
40.02
148.55
*KSA stands for Kasim Sulaiman Abdullahi; see http://www.facebook.com/permalink.php?story_fbid=303255423046329&id=111678125537394 "Economics of Crude Oil Refining and Marketing in Nigeria"
IA stands for Izielen Agbon: see http://saharareporters.com/article/real-cost-nigeria-petrol-dr-izielen-agbon "The Real Cost of Nigerian Petrol"
TABLE 7: FUEL SUBSIDY BENEFICIARIES’ NUMBERS BY YEAR
S/N
YEAR
TOTAL
NUMBER
NAMES
1
2006
3
Majors: MRS, Total and Oando
2
2007
8
Add 5:
Majors: AP and Mobil
Petrol Depot Owners: NIPCO
Independent Marketers: AITEO Energy Resources and Triquest
3
2008
23
Add 15:
Major: Conoil
Petrol Depot Owners: Capital Oil, Folawiyo Energy
Independent Marketers: Triquest Oil Services, IMAD Oil & Gas,
Integrated Oil and Gas, Rahamaniyya, AMG, Petro Energy,
Brittania, ACORN, A-Z Petrolleum, SHIELD Petroleum,
MAJOPE Investment Limited
4
2010
36
Majors: 6
Petrol Depot Owners: 2
Independent Marketers: 28
5
2011
100+?
Majors, Petrol Depot Owners, Independent Marketers & Road Construction Companies?
TABLE 8: SUGGESTED DISTRIBUTION (Based on Greater Emphasis on Infrastructure, and De-Emphasis on Derivation in FAAC Allocation)
S/N
TIER OF GOVERNMENT
INFR.
SOC. SAF. NET
AMOUNT
(Naira, Billion)
%
Current SURE
Distribution
%
1
Federal + FCT
493.97
79.38
573.35
51%
488.35
43%
2
State
138.93
125.70
264.63
23%
411.03
36%
3
Local
138.93
125.70
264.63
23%
203.23
18%
Sub-Total
771.83
330.78
1102.61
97%
1102.61
97%
5
Transfers
31.37
3%
31.37
3%
Total
1133.98
100.00%
1133.98
100.00%
TABLE 9: SUGGESTED ALTERNATIVE SURE MONEY DISTRIBUTION – TIER-BY-TIER, PROGRAM-BY-PROGRAM
S/N
EXPENDITURE ITEM
Federal
State
Local+FCT
Total
(i) SOCIAL SAFETY NETS:
1
Maternal and child health services,
-
-
125.70
125.70
2
Public works/youth employment programme
52.92
-
-
52.92
3
Urban mass transit scheme
-
125.70
-
125.70
4
Vocational training schemes
26.46
-
-
26.46
Sub-Total, Social Safety Net
79.38
125.70
125.70
330.78
(ii) INFRASTRUCTURE
5
Roads and Rail
164.66
(rail)
46.31
(roads)
-
210.97
6
Water Resources
-
-
138.93
138.93
7
Refineries
329.31
-
-
329.31
8
Power
-
92.62
-
92.62
Sub-Total, Infrastructure
493.97
138.93
138.93
771.83
Grand Total
573.35
264.63
264.63
1102.61
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