July 7, 2022

Fuel Queues: NNPC, Nigeria, Victim Of Global Oil Refining Crunch

4 min read

By Charles Ibiang

The emerging Queues at the fuel Stations across Nigeria today, most especially in Abuja, Lagos and Oyo are gradually becoming worrisome. Its taking the shape of another adulterated fuel saga, that nearly threw the Country into an energy crisis at the beginning of the year.

Nigerians are so apprehensive and hope that the situation doesn’t degenerate into the recent ugly past, few months of fuel queues at Filling Stations.

There are also fears, across the board, by pundits that this resurgence of fuel queues at Filling Stations is intentional and a cheap way by Government and free-market proponents to increase prices or lay the basis for the Removal of Subsidy. However, this may not be the case.

President Buhari has assured Nigerian a fortnight ago that, there won’t be subsidy removal for now, because of it’s effect on the general Nigeria Economy. Even though this decision may look Political, that is the current stand of Government.

In the same vein, Mele Kyari led NNPC Ltd has come out to give assurances of sufficiency in our National Reserve to meet the needs for Supply of Petroleum Products, Nigerians are still wondering, what is truly happening.

The Government just resolved the NARTO crises by a corresponding hike in the freight. Cynics are saying it will increase prices at the pump.
Again, the NARTO’s earlier protest to the overwhelming cost of freights, occasioned by high cost of diesel point to one major problem, the world wide rising cost of Petroleum and Refined Products.

The explanations, that freights cost issues with NARTO, who refused to ferry or transport Products to depots across the Country is not at all the real situation, NNPC Ltd is passing through a hell of difficulty getting Refined Petroleum Products globally due to a worldwide Oil Refining CRUNCH.

According to global down stream Experts, about 3.32 million bpd Refining capacity has been lost worldwide since 2019.

The reasons for this global crunch is as a result of reduction in Refining Capacities of Refineries, that are finding it hard to secure funding or investment Capitals basically because of Climate Change concerns,& Paris Climate commitments which gave impetus to campaigners against investment in Fossil Fuel(Crude oil) in pre-pandemic era.

The Pandemic era ushered with it, extremely harsh environment, where many Economies experienced Lock down in order to contain the new corona virus.

As the lockdowns in different Countries came into full effect, a lot of Industrial production units were downgraded so also were many REFINING Capacity Units of Refineries.

Restarting or reopening these production/ refining units has not yet been optimized after the pandemic because of lack of new Investments, slow Economy recovery, and disruptions in global supply chain and logistics.

The post pandemic environment, which has begun to show signs of recovery, has been characterised by rising inflation and high cost of heating and Energy inputs.
The Russian-Ukraine conflict has aggravated the Supply of Refined Petroleum Products with its attendant logistics, because some of the Refineries are in Europe and Oil Tankers/ Ships used for conveying this white Petroleum products are owned by Russia Oligarchs who are facing severe western Sanctions.

HOW IS NNPC AND NIGERIA THE VICTIM OF THIS GLOBAL INTERPLAY OF FORCES.

Even though our situation is self-inflicted, the present crisis indicates that Nigeria, with four non-functional Refineries and a Crude Oil producing Country is shamelessly not Refining Petroleum Products for her domestic consumption and usage.

The reality is that Nigeria relies solely on Importation of refined petroleum products. This comes with it’s attendant implications associated with the vagaries of global Competition, high oil prices, shipping /logistics challenges and forces of demand and Supply.

Nigeria and NNPC are at the mercy of these Geopolitics forces, coupled with the challenges of militancy in the Niger-Delta resulting in significant shortage of crude Oil supply due to theft, corruption, Pipelines Vandalism, smuggling and poor Policy implementation.

According to International Energy Agency, the World has a 100 million bpd refining Capacity, with 20 million unused capacity, mostly in Latin America and Africa.

In April, 78 million barrels were processed daily, down sharply from the pre-pandemic average of 82.1 million bpd. The IEA expects refining to rebound during the summer to 81.9 million bpd as Chinese, Asia and middle east refiners come back on stream. This is very instructive.

Therefore, IEA projected global refining capacity is said to expand by 1 million bpd per day in 2022 and hopefully, 1.6 million bpd in 2023, as reported by Reuters.

Is Nigeria the only Country experiencing supply shortage and soaring prices of Petroleum Products?

The answer is NO especially when compared with the rising Fuel prices in UK, US and European countries.

Another factor, contributing to high prices is the cost to carry products on vessels overseas, which has risen due to high global demand, as earlier stated in this article, as well as sanctions on Russian vessels.

In Europe and part of Asia, refineries are constrained by high prices for natural gas, which powers their operations.

Similarly, some refineries also depend on vacuum gas oil as an intermediate fuel. The Loss of Russian vacuum gas oil has prevented certain Refineries from restarting certain gasoline-producing units, like India, that refine about 5million BPD but rely heavily on cheap Crude from Russia but impacted now by western Sanctions.

This is NNPC Ltd and Nigeria dilemma today!


Lord Charles Ibiang is the Chairman of Partners for Petroleum and Energy Sector Promotion Intiative(P-PESPI).

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