Financial Energy Review
………by Ben Ndubuwa…….
At the ongoing 2024 Africa OTL, the President of the Nigerian Chamber of Shipping, Aminu Umar has expressed concern over the significant challenges faced by oil and gas operators in the Nigerian maritime sector. He highlighted issues ranging from infrastructure gaps to complex regulatory hurdles.
“Over the last year, it’s been a ‘yo-yo’ experience for us operating in Nigeria’s oil and gas shipping sector,” Umar said. “We face numerous disruptions, some beneficial and others less so. Yet, the lack of required ship capacity remains our number one challenge, hampering our ability to meet customer demands,” he added.
Operational Inefficiencies Impacting Pricing
Umar who is also on the board of the International Chamber of Shipping pointed out some operational inefficiencies as a major factor driving up petroleum prices. “The impact of inefficiency on pricing is enormous. Whenever there’s a disruption in the supply chain, costs skyrocket,” he explained. Limited loading and discharge facilities further hinder efficiency, which, in turn, burdens consumers with higher prices.
Additionally, the bureaucratic procedures involved in securing approvals were identified as a significant bottleneck. “Nigeria’s approval process is overwhelming, with numerous agencies involved, causing delays and losses that directly affect petroleum pricing,” he said.
Safety and Compliance Challenges
Safety standards in Nigerian and some Central and Southern African ports are another critical issue. “In many cases, ports lack necessary navigation aids, putting vessels at risk,” Umar pointed out. This absence of basic infrastructure not only affects operations but can also invalidate ships’ insurance coverage.
On compliance, the President of the Nigerian Chamber of Shipping highlighted global regulatory issues that impact Nigeria, despite the lack of formal domestic policy. “Shipping is global. Even though Nigeria hasn’t sanctioned Russian trade, European sanctions directly affect us because our certifications are international,” he explained. Consequently, Nigerian operators face significant restrictions when conducting business with Russian vessels.
With Nigeria relying heavily on imported petroleum products, these shipping and regulatory issues contribute to an already complex landscape. Industry stakeholders are hopeful that regulatory bodies will consider these challenges to improve efficiency and enhance safety standards.
