Nigeria on brink of fuel shortages after it discovers off-spec gasoline

Nigeria, Africa's biggest oil producer, is on the brink of gasoline shortages after Nigerian National Petroleum Company halted distribution of over 100 million liters of off-specification gasoline, industry officials said Feb. 9.

NNPC Ltd. is intensifying efforts to increase supply of its gasoline imports, urging some trading houses to urgently secure prompt supplies, they said.

A gasoline cargo that discharged gasoline into Nigeria late last month was labeled off-spec for high methanol content, officials told S&P Global Platts.

Nigerian fuel marketer MRS Oil said Feb. 9 that the contaminated gasoline it received had originated from a cargo supplied by Litasco, the trading arm of Russia's Lukoil.

A representative at Litasco was unavailable for immediate comment.

Nigeria imports around 1 million-1.25 million mt/month of gasoline to meet all of its national demand, estimated at 53 million liters/d.

In a statement late on Feb. 8, the country's oil regulator, the Nigerian Midstream and Downstream Petroleum Regulatory Authority, confirmed that "limited quantities for gasoline with methanol quantities above Nigeria's specification were discovered in the supply chain." NMDPRA said the supplier of the off-spec product had been identified and further commercial and appropriate action would be taken, but it did not name the trading house.

"The product has been isolated and withdrawn from the market including loaded trucks in transit," it said.

Methanol can be regular additive in gasoline, usually blended in very small quantities.

20% methanol

The affected gasoline cargo was imported under the country's direct sale and direct purchase scheme and was received last week at a major reception terminal offshore Lagos operated by major fuel marketers for onward distribution across the country.

MRS Oil Nigeria, one of the companies involved in the DSDP, said it had received 5,000 mt of the contaminated gasoline, which had a 20% methanol content.

In a statement on Feb. 9, MRS said the consignment of gasoline had originated from the vessel Nord Gainer, which was supplied by Litasco, the trading arm of Russia's Lukoil. MRS said four other companies had also received this product in different quantities. The Nord Gainer discharged around 45,000 mt of gasoline in Lagos over Jan. 24-30 from a cargo that loaded from Antwerp on Jan. 2, according to data from Platts cFlow trade-flow analytics software.

NNPC is currently the only sole importer of gasoline, through its trading arm Duke Oil, because of the current subsidy regime. This product is then supplied to many retail fuel companies like MRS Oil. Private marketers have been reluctant to directly import gasoline on the grounds that the pump price is regulated and therefore they won't be able to recover their costs.

"MRS had a total of 350,000 litres in tank at the eight stations; we await approval from NNPC and NMDPRA for the return of the product," MRS Oil said. "The eight stations have been isolated, but there are other tanks within the stations that will receive uncontaminated product for sale as soon as possible."

Marketers that had already taken delivery of the fuel include the local subsidiary of TotalEnergies and several other indigenous companies, which have had to shut down operations, leading to gasoline shortages.

"We have had to close down our outlets because of this contaminated fuel," an official of TotalEnergies said. "Motorists have reported damages to their cars."

Motorists formed long queues at gas stations in Nigeria's federal capital Abuja and the country's commercial capital Lagos.

Nigeria has struggled for years to address the vehicle pollution crisis due to the poor quality of fuels it was importing.

Despite being Africa's largest oil producer, Nigeria imports almost all the gasoline it consumes locally, due to the poor performance of the four state-owned refineries.

The plants, with a combined nameplate capacity of 445,000 b/d, have been shut for repairs for many years, and the government is currently working on overhauling them.