African countries, led by Nigeria, have set a record pace of refined oil products imports from the US since the summer on an open arbitrage, flush inventories, and an eagerness on the part of refiners to avoid paying RINs costs.
However the Federal Government says it is planning to privatise the 450,000 barrels refineries that have been comatose for several years.
Diezani Alison Madueke, minister of petroleum, said “We would like to see to see major infrastructure entities such as refineries, moving out of government hands to private hand.
“Nigeria is short products; always has been. Jet and gasoline in particular,” a longtime US distillates trader said. “They’re netting more from the US lately because the US is getting more into the export business, so there are more molecules here.”
Nigeria imported a record 2.78 million barrels of total US products in August, up from a then-record 2.1 million barrels in July and 1.46 million barrels in June, the most recent data from the US Energy Information Administration showed.
The trend looked to continue, with Platts cFlow vessel-tracking software showing five ships capable of carrying 300,000 barrels, headed to Nigeria: Prisco Irina from Lake Charles, Louisiana; MR Sirius from Pascagoula, Mississippi; and the STI Beryl, Maxwell Bay and Arctic Breeze, all from Port Arthur, Texas. The 537,000-barrel Hellespont Promise lists a West Africa destination out of Houston.
“There’s been a flurry of excitement lately,” said one distillate source based in Europe. “From the US, Venezuela – they’re all going to WAF.”
The Nigeria-based Sahara Group is understood to be bringing jet fuel to Nigeria on board the Prisco Irina and Maxwell Bay. A slight oversupply in the Mediterranean region has also seen WAF draw barrels from Morocco. Total fixed the High Force to load up to 275,000 barrels on November 23 from Mohammedia for delivery to West Africa at Worldscale 120.
A shipping source agreed most of the vessels were carrying jet and gasoline on charters relet, or basically subleased to other traders.
A US gasoline trader called the arb from the Gulf Coast “quite good for WAF right now if you have the right shorts.” West Africa imports 91 RON gasoline 9 or 10 RVP similar to the M grade in the US Gulf Coast, which has seen high inventories and depressed prices since the summer.
“It very much used to be that WAF was supplied by Europe, but with a weaker GC basis and a closed arb from Europe, it’s not the freight but very much the alternative values driving this.”
He said the major trading companies who have the shorts in Africa are the ones taking advantage of the arb.
About 1.2 million barrels of finished US gasoline were sent to Nigeria in August, a record, up from 927,000 barrels in July and 610,000 barrels in June. A record 1.43 million barrels of jet fuel were shipped there in August, climbing from 909,000 barrels in July and 844,000 barrels in June. Lubricants and some other products generally make up the rest of the imports.
Despite being Africa’s top crude oil producer, Nigeria imports more than 80% of its petroleum products because of its inadequate domestic refining capacity.