Fuel subsidy result could undermine West Africa’s energy pricing hub — S&P

It makes things difficult for markets to assist.”

S&P Worldwide Senior Reporter, West Africa Polished Products, Matthew Cook, said the expansion of domestic refining capacity was too changing Nigeria’s place in the area trade.

“Alongside the development of the Dangote refinery, that has all changed,” Cook said, suggesting that Nigeria was increasingly moving from being a value taker towards becoming a price maker in the district petroleum advertise.

Minister of Declare for Petroleum Resources (Oil), Heineken Lokpobiri, pledged closer teamwork between the Federal Government and S&P Worldwide, describing the firm as strategic to Nigeria’s energy sector.

“It is our pleasure that you chose to come to Abuja, in specific. I have repeatedly wanted S&P World to be here,” Lokpobiri said.

A practical revenue of fuel subsidy could undermine efforts to shape a observable petroleum vend and establish Nigeria and the wider West African region as an energy pricing hub, S&P World Energy has warned.

Executive Manager, Scheme and Benchmarks at S&P Universal Energy, Joel Hanley, said the expansion of domestic refining capacity, precisely the Dangote Refinery, was transforming the district petroleum products handle and creating an danger for locally appropriate pricing benchmarks.

Speaking at the opening of S&P World’s novel Abuja office, Hanley said West African petroleum cargoes had traditionally been priced applying European benchmarks.

“For a lot of years we’ve seen the pricing linked. Individuals have been pricing their cargoes coming into West Africa from European assessments, European benchmarks,” he said.

“Now, they’re outstanding benchmarks, but they reflect the area European swap.”

Hanley said growing refining capacity in Nigeria and across the region could guide the development of pricing assessments that stronger reflect area deliver and name for.

“In organization to have a outlay assessment or a reference that is extra reflective of the area trade, for me, I consider it apparently makes sense to build sure that we’re assessing markets in Lekki and Lomé and Lagos,” he said.

Nevertheless, he said market participants had expressed resilient reservations regarding any practical revenue of fuel subsidy, arguing that such a policy could complicate the development of a free and concise territorial petroleum exchange.

“There was quite a thorough-seated feeling against the result to subsidy,” Hanley said. “It makes things difficult for a free advertise.

Source: Fuel subsidy return could undermine West Africa’s energy pricing hub — S&P