Africa’s Largest Oil Producer Nigeria Crushed by Fuel Shortages

A motorist
Pius Utomi Ekpei/AFP/Getty Images)

Airlines in Nigeria warned this week that they were days away from running out of jet fuel, and business groups demanded the government act to stabilize petroleum product availability nationwide, Nigeria’s Vanguard reported on Wednesday, as Africa’s largest oil producer struggles to refine any of its supply.

Nigeria is OPEC’s most populous nation and produced 1.258 million barrels of oil a day in February, according to OPEC statistics. The country failed to meet its OPEC production quota in February of 1.8 million barrels per day, dropping from about 1.4 million barrels per day in January. Among the reasons for its sustained inability to produce oil are criminal attacks on oil facilities. On Monday, the parent company of the Nigerian Agip Oil Company (NAOC) announced that it would fail to produce 25,000 barrels of crude oil and 13 million standard cubic meters of gas per day in one of its facilities after an unspecified “attack” resulted in a “blast, consequently causing a spill,” that rendered the facility inoperable indefinitely.

“It was the second attack in the last three weeks after a similar incident on February 28 at Eni’s Obama flow station,” the Premium Times reported.

Nigeria has almost no refining capacity, meaning that the gasoline and other petroleum fuel products that citizens consume are almost entirely imported. Global volatility, partially due to the war in Ukraine, has sent oil prices soaring and could potentially lead to a significant fuel crisis in the country, which was already struggling with empty gas pumps nationwide in February prior to the war.

Domestic shortages have greatly exacerbated price surges in Nigeria, Africa News noted on Wednesday.

“Nigeria has faced fuel shortages since February after importing substandard fuel which resulted in weeks of severe scarcity and long queues at filling stations. The shortage has seen transport cost rise, thereby affecting goods and commodities,” the outlet explained. “Without functional refineries, Africa’s largest oil producer relies almost entirely on imported fuel.”

Adding to general alarm about Nigeria’s energy status, the country suffered a nationwide power grid collapse this week that Vanguard reported followed “weeks of bickering among operators” and resulted in not a single power plant in the country being operative at one point on Sunday.

“I have the mandate of every airline in this country to announce to you that if they cannot come down from their rooftop, we have only three more days to be able to fly,” Allen Onyema, the vice president of the Airline Operators of Nigeria, told the country’s House of Representatives on Monday. “We are not threatening this country. We have been subsidizing what we are doing.”

Abuja typically restricts airlines’ ability to import jet fuel, a policy Onyema urged lawmakers to repeal.

“What we are asking from the government is to give us the right to import aviation fuel. What others use in insuring one plane is what we use in insuring three planes in Nigeria, so the Nigeria airline is dead on arrival,” Onyema said.

The Nigerian government moved to allow the imports on Tuesday.

Lawmakers, labor leaders, and business associations are demanding the government allow private international oil companies to acquire inactive oil refineries currently under government control and restore them, allowing Nigeria to use more of its own oil rather than import it. Vanguard quoted the head of the Lagos Chamber of Commerce and Industry Michael Olawale-Cole, for example, who explained that an increase in oil prices internationally did not benefit Nigeria even as it sold its oil, because it had to use those profits to buy equally expensive refined oil from abroad.

“The most sustainable way to go is to increase our local refining capacity and save the huge spending of our foreign exchange (forex) on the importation of fuel,” Olawale-Cole urged. “Oil prices above 110 dollars per barrel had not translated into profits for Nigeria for the reason of equally increasing fuel subsidy payments.”

“At the root of the current pain being faced by millions of Nigerians all over the country is the defective policy of nearly one hundred per cent importation of refined petroleum products,” read a statement this week by Nigeria Labour Congress (NLC) President Ayuba Wabba. “Nigeria is about the only OPEC country trapped in the quagmire of complete dependence on foreign refineries for products it has the capacity to produce locally.”

The NLC statement explained that fuel shortages had caused chaos to erupt in nearly every aspect of the Nigerian economy.

“In many parts of Nigeria, manufacturing has ground to a halt. The current haemorrhage induced by the prevailing scarcity of petroleum products has very grave concomitant effects on the already parlous unemployment and security situation in our country,” the statement read. “The persisting scarcity of refined petroleum products has unleashed a tsunami of very dire economic realities, including exorbitant airfare, cancellation of scheduled flights, destruction of thousands of automobile engines by adulterated fuel and wastage of productive hours.”

Federal government officials have publicly lamented that a “lack of investment” has hampered the country’s ability to produce oil and done little to alleviate the situation.

Unspecified “sources” within President Muhammadu Buhari’s office told Vanguard this weekend that the government “has initiated a nationwide, round-the-clock premium motor spirit (PMS) distribution plan” to ensure supply, and that officials would “hold responsible” those who caused the shortages.

“Indeed under the Buhari administration what used to be an incessant and recurring decimal of fuel scarcity had been reduced to it barest minimum until the recent case of adulterated PMS, an incident that incurred the President’s wrath,” the anonymous source said.

Buhari, a 79-year-old former military dictator, is reportedly in London for medical reasons. Nigerians vote for a new president in a year and will vote in midterm congressional and gubernatorial elections in June and July.

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