Ghana, Nigeria, Liberia offer lowest diesel prices in West Africa

Ghana, Nigeria and Liberia offer the lowest diesel prices in West Africa according to the latest global diesel prices dated October 26, 2015 and monitored by West Africa Energy. According to the data, the cheapest diesel price in the sub-region is obtained in Ghana with a pump price of $0.71 per litre while the product retails for $0.74 and $0.86 per litre in Nigeria and Liberia respectively.

The highest retail price for diesel in the sub-region is obtained in Guinea, Senegal and Bukina Faso with $1.20, $1.18 and $1.12 per litre respectively. Both Togo and Mali occupy the fourth position in the sub-region’s highest retail price for diesel with $1.09 per litre.

For the rest of Africa, however, the lowest pump price for diesel is found in Libya, Algeria and Egypt with $0.11, $0.13 and $0.23 per litre respectively. Somali, DR Congo and Central Africa Republic offer the highest pump price of diesel in Africa with $1.45, $1.42 and $1.34 respectively.

The average price of diesel around the world is $0.93 per litre. However, there is substantial difference in these prices among countries. As a general rule, richer countries have higher prices while poorer countries and the countries that produce and export oil have significantly lower prices. One notable exception is the U.S. which is an economically advanced country but has low gas prices. The differences in prices across countries are due to the various taxes and subsidies for diesel.

Ghana retail price still lowest

Even with the increase in the pump price of diesel in Ghana, the country still offers the lowest diesel price in the sub-region. There has also been a more than 3 percent increase in the price of diesel per litre. The increment followed the full deregulation of the petroleum downstream sector.

The Ghanaian government cut off its subsidy of petroleum products on June 16, allowing oil marketers to sell at their independent prices albeit within a window that that it agrees with them. The deregulation triggered a rise in the price of petroleum products across the country, starting with a four percent increase on June 16 and a further 15 percent leap on the 2nd of July.

However, there was later a reduction in pricing which even though remains higher than pre-subsidy removal times but still remains the lowest in the West African sub-region.

Nigerians expect diesel prices to be lower

Years after the deregulation of diesel in Nigeria, the expected market behaviour of a deregulated product is far from being realised in Nigeria. The price of diesel has remained high in Nigeria despite the crash of oil prices in the international market to below $50 per barrel.

Following the crash of crude oil prices, the maximum indicative benchmark of open market price of diesel is about N99.11 per litre going by the Petroleum Products Pricing and Regulatory Agency. However, the products retails for an average of N150 per litre across the country.

That the price of diesel has continued to systematically climb in the oil and gas sub-sector of the energy market; without any attempt to slow down remains a source of major concern to industry watchers, consumers and government policy makers. In addition, the commodity even remains scarce in the market, which experts note further constitutes greater threat to the nation economic growth, and national survival.

A company like Oando, it was learnt, had to transfer its stock from Onne to Lagos in order to fill the supply gap. The situation was made worse with the activities of independent marketers who control the larger part of the market. The price made them wary as it changed over- night. As a result, they were forced to re-strategise so as to mobilise enough funds to import the product.

Ayo Farounbi, a dealer, told BusinessDay that marketers would not stop importing the product. He said they would continue to sell at margins profitable enough for to do business.

Saudi Arabia opens diesel market warfare

Saudi Arabia, the world’s top crude oil exporter, has turned itself into a major refined-fuels power, offering customers millions of barrels of diesel and potentially triggering a price war with Asian competitors as its exports feed into a glut.

Saudi Arabia, a leading member in the Organization of Petroleum Exporting Countries, had pledged last November to keep crude output high to defend its market share against higher-cost producers.

Saudi Arabia’s massive refineries are now processing more of its crude at home, moving the country into a tie with Royal Dutch Shell as the world’s fourth-largest refiner and enabling it to export more fuel products than ever before.

Aramco Trading Co, a subsidiary of state oil company Saudi Aramco offered via tenders 2.8 million barrels of ultra low sulfur diesel for loading in late July to early August, trade sources said, enough to meet Japanese demand for three and a half days.  The unusually large volume of offers is likely to add to exports that last year surged to peaks of more than 300,000 barrels per day (bpd), up from next to nothing in 2010, according to data from the Joint Oil Data Initiative.

“We are already seeing the impact in the Asia-Pacific,” said Suresh Sivanandam, principal analyst for refining and chemicals at Wood Mackenzie.

“This year there is not a single drop of diesel exported from Singapore to the Middle East,” he added, referring to a once popular diesel export route.

The Saudi exports, mainly ultra low sulfur diesel destined for Europe, put it in direct competition with big Asian diesel exporters India and South Korea and reduces Asia’s gasoil margin to the lowest in five years.

FRANK UZUEGBUNAM