Europe’s petrochem producers to benefit from the subsidies’ dispute stalling gasoline imports into Nigeria

17-Jan-12

Petrochemicals producers in Europe are likely to benefit from the row over subsidies that has stalled imports of gasoline into Nigeria. The situation may lower the price of the naphtha used both as a key petrochemicals input and for making the motor fuel, as per Reuters. Traders say that blender demand for naphtha is already ebbing as companies wait for the row over gasoline subsidies in Nigeria to be fully resolved. This is good news for petrochemical buyers who must compete with blenders for inputs. Nigerian trade unions called off strikes and protests on Monday after President said he would cut them by one third. He reinstated part of a subsidy on petrol, the scrapping of which had been one of his key policies. As a result of the dispute, however, about 1 mln tons of gasoline is waiting in tankers off the West African coast as exporters wait for ports to reopen, causing a fall in demand in Europe, which exports gasoline to Nigeria. Also traders are anticipating a longer-term drop in gasoline demand in Nigeria if higher prices are eventually agreed. JBC Energy analysts estimate that even if the Nigerian government decides on a lower-scale subsidy, gasoline demand in the country may still fall by 8.5% in 2012 to 133,000 bpd. Traders say that petrochemical users are already purchasing increasing quantities of naphtha as blending interest fades, and naphtha becomes cheaper versus rival feedstocks.