Petroleum Importers Stranded


No Storage Facility To Keep Products

A research undertaken by the Petroleum Unit of the Institute for Energy Security (IES) in May 2016, has indicated that, the country’s petroleum stock, out-strips the available storage capacity.

The lack of storage facility, has currently created a worrying situation with many vessels stranded offshore attracting huge demurrage charges from importers of petroleum products and invariably eroding their profits margins.

A statement issued in Accra by IES and signed by Gilbert Richmond Rockson, Principal Research Analyst Petroleum Unit, suggested that it is “prudent for Bulk Oil Distributors (BDCs), Oil Trading Companies (OTCs), and Oil Marketing Companies (OMCs) alike to reduce their prices on the market to stimulate consumption especially for the productive sector of the Ghanaian economy”.

It added that “another way to avoid the huge demurrage charges is for BDCs and OTCs to re-export to neighboring countries to at least break-even given the needed infrastructure and logistics. In the last month alone, IES can confirm that BOST exported three cargoes of different products by vessels to Nigeria, and continues to export to the land-locked countries like Mali and Burkina-Faso via bulk road vehicles (BRVs)”.

“As at close of business-day 5th June 2016, IES found that the total stock level for Gasoil and Gasoline combined and in-tank at Tema Oil Refinery (TOR), Chase Petroleum, Cirrus Oil, Bulk Oil Storage and Transportation Co. Ltd (BOST), and Fuel Trade stood at approximately 440,000,000 million liters”.

The statement said, “but for the lack of adequate storage space in the country, these developments could have easily positioned Ghana as the petroleum hub of West Africa as envisaged. The IES therefore calls on all industry players in the petroleum downstream sector, the regulator, and the government to work towards removing this bottleneck to ensure that the full benefits of deregulating the sector is derived”.

With the deregulation ensuring full cost recovery and efficiency in the downstream sector, coupled with the coming on stream of the Tema Oil Refinery, the country’s petroleum stock is at a very encouraging level.

Out of this quantity, BOST alone owns approximately 72 percent, which is capable of meeting almost five weeks of national consumption.

IES is a think-tank, which directs attention to the strong link between energy and the security of supply. It provides a stage for research and publications, debates, conferences, consultancy, advocacy, training, and as a conduit to strengthening the world’s energy security.

It is independent but sometimes in collaboration with governments, players in the energy sector, academia, the media, consumers, professionals, and experts; IES provides data-driven analysis of issues that influence both local and global energy market.

In the statement, IES, noted that following the price liberalization of Ghana’s petroleum downstream sector in June 2015 which paved the way for market forces to determine petroleum prices, there have been many interesting developments in the country’s petroleum landscape.

Apart from the keen competition being witnessed among the Petroleum Service Providers (PSPs) which led to petroleum prices falling by almost 37 percent between July 2015 and December 2015, one key development is the ending of the frequent shortage of fuel in the country; and thereby maintaining availability of fuel all year round.

It mentioned that “aside the quantity in tanks, there are vessels offshore carrying over 90,000,000 liters of both Gasoil and Gasoline. It is interesting to note that more vessels are being expected in the country within the next few days, as suggested by National Petroleum Authority’s (NPA’s) Laycan.

“..Putting together the quantity of Gasoil and Gasoline in storage-tanks onshore and in vessels offshore, aside the expected vessels; the Institute for Energy Security can confirm that it is capable of meeting over two months of national consumption. And that the only constraint to additional supply is storage space (ullage)…” IES said.

It maintained that “as a result of the over-supply, coupled with the stability of the Ghanaian Cedi, and the crude oil price around the $50 per barrel mark; the IES can project that the fuel price on the local market will remain stable over the next few weeks, all things being equal”.

In the meantime, the Petroleum Unit of IES, will continue to monitor the prices set by the OMCs, as well as their services and publish its findings on weekly basis to assist the Ghanaian consumer to make an informed decision when buying fuel at the pump.

Market Analysis: Puma, Frimps, and Total Captures Market
As at close of business-day June 7, 2016, Frimps Oil, Puma Energy, Goil and Allied Oil captured the 1st, 2nd, 3rd and 4th positions respectively on IES Best 10 OMC chart.

However at the Opening of today’s business (9th June 2016), the dynamics have changed dramatically. Puma Energy has taken the lead on the IES chart by selling Petrol for Ghs3.590/Litre and Diesel Ghs3.520/Litre respectively whilst Frimps Oil dropped to the 2nd position by making an upward adjustment of 3.2% on both Petrol and Diesel.

In spite of the drop, Frimps Oil’s products are mostly sold below the market average. IES will be investigating the reason behind this and inform consumers accordingly. The Market also saw Goil dropping from 3rd to 5th position on the chart, losing its position to Total Petroleum.

Total Petroleum Ghana Ltd captured this position from its previous 7th place on the back of a decrease in price of petrol by 1.10 percent. Shell Ghana Ltd advanced from the 8th spot on the chart as at 7th June 2016 to the 6th position today, as a result of the reduction to its prices by 0.8percent and 0.6 percent on Petrol and Diesel respectively.

This development brings some form of relieve for consumers who were disturbed over the increments that took place over the last weekend.

But due to the fact that Goil reduced its price of Petrol and Diesel by 2.9Pesewas/Litre and 1.9Pesewas/Litre respectively on Monday evening after the weekend’s increment, the other players in the market were forced to reduce prices by an average of 4Pesewas/Litre. This is a derivative of the price liberalization of the downstream sector of the petroleum industry in Ghana.

The Institute for Energy Security expects no further increment within the first pricing window for the month of June 2016.

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