FG to maintain narrow fuel price band as OPEC+ deepens cuts

With concerns raised about the ability of petroleum marketers to adjust their pump price under the month pricing template, the Nigerian National Petroleum Corporation (NNPC) has said government would maintain a narrow price band to afford operators to adjust in the transition period.

Besides, the NNPC noted that it would no longer be involved in the management of the nation’s refineries after their rehabilitation.The Group Managing Director of NNPC, Mallam Mele Kyari, disclosed this in separate television programmes monitored by The Guardian.

He said: “It is a transition and people are learning how to manage this and customers are trying to adjust. When we reduce prices, people typically have old stock that they have bought at old prices and in any jurisdiction, you allow some of transition to take you to the real market condition and this is what we are trying to manage and this is why we are seeing different prices at different stations and some stations can adjust to N123.50 because their procurement is of current value.

“Ultimately, marketers have indicated interest in importing petroleum products at the regulated price and once they do that, you will see that the band of price will determine the market and the PPPRA will observe and manage the market”.

Meanwhile, OPEC and its allies are moving closer towards a historic deal to take at least 10% of global crude supply off the market as they get set for the first of two critical meetings later Thursday, with key producers Saudi Arabia and Russia signalling their willingness to commit to significant production cuts.

OPEC kingpin Saudi Arabia could bring its production down to about 8 million b/d, from its current level of about 12 million b/d, according to a source briefed by the kingdom.

Also, Russia’s energy ministry has said that Russia, the largest non-OPEC producer cooperating with OPEC, was prepared to cut 1.6 million b/d if others followed suit and cut proportionally. Russian crude and condensate production was 11.29 million b/d in March, according to government figures, though the previous supply accords of the so-called OPEC+ alliance only covered crude.

The positions indicate the OPEC+ coalition’s math is starting to line up for a total production cut of 10 million b/d or more, though delegates said many details — including exact quotas, length of the deal, and participation by countries outside the group — remain in flux and could drag out talks at the meeting.

“What we are looking for is more participation from other countries, not only OPEC+ but outside, including the US, Norway and some other influential countries,” Kuwaiti oil minister Khaled al-Fadhel told S&P Global Platts in an interview Wednesday.

On Friday, energy ministers of the G20, including the US and Canada, will also meet online for a summit that could endorse and widen the production cut accord, as they seek to offset the coronavirus pandemic’s impact on the oil market. The G20, which represents the world’s largest economies, is chaired by Saudi Arabia this year.

Besides Saudi Arabia, the rest of OPEC could contribute about 3 million b/d in cuts, according to sources familiar with the talks, asking not to be named due to the sensitivity of the negotiations.

However, the OPEC total could be smaller, as Russia is insisting that the baseline from which new quotas are to be determined be set at Q1 production levels, not current production.

Several OPEC countries, particularly Saudi Arabia, the UAE and Kuwait, surged their output in March, with plans to hit record highs in April.

Russia’s 1.6 million b/d cut offer could be combined with another 1 million b/d in reductions from Mexico, Kazakhstan, Oman, Azerbaijan, Malaysia and four other non-OPEC producers that have been cooperating with OPEC on a series of output cuts since 2017, according to sources.