Nigeria’s petrol landing cost drops to N981/litre due to global oil price declines, while local prices remain high amid ongoing imports.

[dropcap]T[/dropcap]he landing cost of petrol in Nigeria has dropped to N981/litre, influenced by falling global crude oil prices, according to recent data.

The landing cost of Premium Motor Spirit (PMS), commonly known as petrol, has decreased to N981 per litre, as reported by the Major Energies Marketers Association of Nigeria (MEMAN) on Thursday.

Also read: Subsidy: FG may spend N236bn monthly on imported, Dangote petrol

This marks a significant drop from approximately N1,130 in previous weeks, attributed to a decline in global crude oil prices as of September 25, 2024.

Crude oil prices and foreign exchange rates play critical roles in determining the cost of refined petroleum products, including petrol, diesel, and kerosene.

In August 2024, Brent crude, the global benchmark, traded at an average of over $80 per barrel but has recently fluctuated between $70 and $75.

On Thursday, Brent was priced at $71.41 per barrel, down from $73.46 the day before. Statistica noted that the average price of Brent in August was $80.36, with lower oil demand in China and announcements from the Organisation of the Petroleum Exporting Countries (OPEC) expected to increase production contributing to the decrease.

Despite the drop in landing costs, petrol pump prices across Nigeria have continued to rise. Major oil marketers have started importing petrol again after the Nigerian National Petroleum Company Limited (NNPC) was previously the sole importer.

Following the deregulation of the downstream oil sector, three major marketers expected to bring in 141 million litres of imported petrol last week, with some vessels already arriving in Nigeria.

The landing cost of petrol began to decline in mid-July, falling below N950 in early September, despite the dollar’s strengthening against the naira.

The landing cost was calculated using an exchange rate of N1,667.22 to a dollar. As of Wednesday, the average ex-depot prices varied significantly: N865 to N1,200 in Lagos, N980 to N1,400 in Calabar, and N1,200 to N1,400 in Port Harcourt.

Furthermore, the landing cost of diesel now stands at N1,089 per litre, while aviation fuel is priced at N1,117.34. The average ex-depot price of diesel is about N1,165 in Lagos, with similar figures reported in Calabar and Port Harcourt.

The price difference between imported petrol and that from the Dangote refinery could be as low as N83, given the N898 price the NNPC claimed it paid for Dangote’s fuel.

However, Dangote officials have yet to clarify this price. Following the unveiling of locally-produced fuel by the Dangote refinery, the NNPC increased petrol prices from around N600 to N855 and N900 per litre.

According to NNPC spokesperson Olufemi Soneye, prices for petrol lifted from the Dangote refinery will exceed N1,000 per litre in some regions, with the highest price reaching N1,019 in Borno State and lower prices in Lagos and the South.

In a recent media chat, Dapo Segun, NNPC’s Executive Vice President of Downstream, explained that pricing remains market-driven, with ongoing negotiations with Dangote to ensure competitive pricing.

As Nigerians look forward to the potential reduction in PMS prices with the start of naira crude sales on October 1, 2024, the sale of PMS to NNPC continues at the Dangote refinery.