Nigeria has granted licenses to nearly 50 companies to import 30 million barrels of fuel – around 3.5 million tonnes – before the year-end despite large stocks sitting offshore, industry sources said, up from 30 companies last year.
The list of approved fuel importers for the fourth quarter, compiled from industry sources, included a large allocation for Nigeria’s state oil company NNPC, signalling the end of a suspension of its purchases in October caused by overbuying, Reuters reports.
Nigeria, which despite being Africa’s top oil producer relies on gasoline imports because of a lack of refining capacity, had built a backlog of more than 1 million tonnes of fuel waiting to unload offshore, the sources said.
This was starting to clear but around 750,000 tonnes, or 6.4 million barrels, remained in ships off the coast, they said.
Nigeria, Africa’s most populous country, is an increasingly attractive market for refiners because U.S. gasoline imports have dried up, with U.S. production having risen due to the country’s shale oil output.
Imports for the fourth quarter were slightly higher than in the third quarter, when Nigeria ordered 3.4 million tonnes, but analysts expressed surprise at the size of the latest list given the high stocks offshore.
“The decision to go ahead with the fuel importations could be tied to an expectation of a higher level of demand in December and early January,” said Dolapo Oni, oil and gas analyst at Ecobank.
Sometimes allocations are rolled over into the following quarter while others can be abandoned if companies fail to get a bank loan to finance the shipments.
The latest list confirmed a trend of granting allocations to a growing number of local companies, while larger firms received smaller allocations.
Officials from Nigeria’s Petroleum Product Pricing Regulatory Agency were not immediately available for comment.
Oando PLC was awarded the right to import 120,000 tonnes, versus 135,000 tonnes last quarter.
“By and large, everyone’s allocation has been shrunk. The volumes go to more players,” said an industry source with one of the importers.
Folawiyo, in which global commodity merchant Glencore is a minority stakeholder, kept its allocation of 90,000 tonnes unchanged from the previous quarter although industry sources said that was small in comparison to last year.
Large trading houses such as Vitol, Trafigura and Mercuria were absent from the list although some continue to supply Nigeria with fuel via crude-for-products swaps.
Small firms with allocations of fewer than 50,000 tonnes included little-known players such as Acorn, Dozzy and Fatgbems.
The following is a table of companies with some of the largest allocations:
COMPANY ALLOCATION (tonnes)
NNPC 1.3 million
($1 = 159 naira)