Nigeria emerges biggest importer of kerosene from US

While the United States (US) has drastically reduced imports of Nigerian crude oil, following its growing shale oil production, Nigeria has emerged as the largest and second-largest importer of US kerosene and jet fuel respectively, according to data newly released by Energy Information Administration (EIA), the statistics arm of US Department of Energy.

Highlighting exports of crude oil and petroleum products by destination, February 2014, EIA shows that Nigeria imported 864,000 barrels of US jet fuel in February, rising from 292 barrels in January. In November 2013, a record 1.58 million barrels were imported.

Canada remained the top US jet fuel importer in February, with 1.28 million barrels. After Nigeria, came Argentina with 376,000 barrels, its largest-ever US pull. Chile, Mexico and Panama were the only other countries with the equivalent of one cargo of US jet fuel in February.

Nigeria also brought in its largest kerosene cargo – 292,000 barrels – in February, and only its fifth-ever kerosene cargo from the US, including one each in July, October and November 2013. Canada took in 213,000 kerosene barrels in February.

Household kerosene (HHK) is a particularly important fuel for many Nigerians used in cooking, lighting and heating. It is said to represent more than 80 percent of the fuel mix from non-renewable resources used for cooking. 

In Nigeria, the government requires marketers to sell kerosene at below market rates. It then pays the marketers the difference between the market price and the government-approved retail price. The NNPC is the sole importer of the fuel.

But despite the kerosene subsidy regime, retail prices of HHK across the country have been far above the government-approved price of N50 per litre, ranging from N100 to N250 per litre, depending on the location, with only the NNPC petrol stations and a few retailers in Lagos, Port Harcourt and Abuja selling at the approved regulated price.

The upward march for US exports may restart, especially with sources seeing constant demand to Latin America and Canada, and increasing demand to West Africa, Platts noted.

Platts cFlow vessel-tracking software and sources, showed at least four jet fuel cargo candidates capable of carrying at least 300,000 barrels headed to Nigeria: Torm Amalie from Port Arthur, Texas, chartered by ENI; Pacific Diamond out of Alliance in Louisiana chartered by T&S Shipping; Undine out of Houston chartered by Delaney Petroleum; and Isola Bianca out of Alliance.

At least five other ships were en route to other parts of West Africa, but those were said more likely to contain gasoline or diesel.

 Nigeria is Africa’s top crude oil producer, but imports more than 80 percent of its refined petroleum products for the servicing of its economy, because of its inadequate domestic refining capacity. Nigeria’s four refineries with a combined capacity of about 445,000 barrels per day (bpd) are undergoing scheduled turn around maintenance to improve their reliability.

The government plans to boost utilisation rates for the refineries to about 90 percent of their installed capacity. The four refineries operated at an average of 31.1 percent of capacity in 2012, according to recent data from the Central Bank of Nigeria.

Aliko Dangote, Africa’s richest man and business mogul, is building a $9 billion refinery/petrochemical/fertiliser complex at the Lekki Free Trade Zone (LFTZ), Lagos. The refinery will initially have a capacity of 400,000 bpd, doubling Nigeria’s refining capacity, as well as cut imports of refined petroleum. The refinery, which Dangote hopes will be completed by 2016, will save the country as much as $24 billion a year in foreign exchange by more than halving fuel imports, according to Dangote.

January and February saw the two highest US kerosene export months since January 2008, when it was 887,000 barrels. Jet fuel exports, meanwhile, registered 4.06 million barrels, compared with 4.27 million in January and 3.19 million in February 2013.

Jet fuel exports have trended higher in the last five years, hitting a record 6.42 million barrels in November before dropping in the winter due to domestic demand.

FEMI ASU