Petrol Landing Cost Declines To N981/litre Amid Global Oil Price Fluctuations
The landing cost of Premium Motor Spirit (PMS), commonly known as petrol, has dropped to N981/litre as of September 25, 2024, according to the Major Oil Marketers Association of Nigeria (MEMAN). This is a significant decrease from the previous landing cost of around N1,130/litre in recent weeks, with a reduction of over N140. The decrease is attributed to a decline in global crude oil prices, a major factor that influences the cost of refined petroleum products.
In August 2024, Brent crude oil averaged $80.36 per barrel but has since fluctuated, trading between $70 and $75 in September. As of September 25, it was priced at $71.41 per barrel, compared to $73.46 the previous day. This drop in crude oil prices is partly driven by reduced oil demand from China and an anticipated increase in production by the Organisation of Petroleum Exporting Countries (OPEC).
In light of the lower landing costs and the full deregulation of Nigeria’s downstream oil sector, major oil marketers have resumed the importation of PMS. Previously, the Nigerian National Petroleum Company Limited (NNPC) was the sole importer, but now, private marketers are bringing in petrol, with some vessels already arriving in the country. Around 141 million litres of petrol are expected to be imported, boosting local supply.
The ongoing ramp-up in local production at the Dangote Petroleum Refinery, which recently began supplying the market, adds another layer of complexity to the petrol market. However, differences in prices between imported petrol and locally produced fuel from Dangote still persist. NNPC claims to purchase Dangote’s fuel at N898/litre, though refinery officials have denied this figure. NNPC has also indicated that prices of PMS could exceed N1,000/litre in northern regions of Nigeria, while Lagos might experience lower prices around N950/litre.
Despite the decline in landing costs, ex-depot prices remain high across various regions. In Lagos, petrol ex-depot prices range between N865 and N1,200, while in Calabar and Port Harcourt, they range from N980 to N1,400. The landing cost of diesel, another key refined product, stands at N1,089/litre, with aviation fuel priced at N1,117.34/litre.
As Nigeria transitions into an era of full deregulation, the market is expected to see continued fluctuations driven by global oil prices, foreign exchange rates, and local production capacities. The government and oil marketers are hopeful that the commencement of crude sales from the Dangote refinery in October 2024 will stabilize and reduce prices.
