World Bunkering > News > Autumn 2009 > West Africa adapts

While oil revenues have recovered somewhat since the beginning of the year, there is a wide spread understanding that the global economy is interrelated and West Africa is not entirely insulated from the downturn.

One prominent bunker industry source cautioned: “The impact of the present financial crisis would be felt in Nigeria in the international trade. Nigeria’s economy is crude oil export oriented. Our major trading partners in America, Europe and Asia have been the hardest hit by the crisis. If the economies of these countries continue to face a crunch, the risk of reduced commodity export for Nigeria is increased. This would in turn greatly impact on the revenue from oil with the falling oil prices. Reduction in government revenue would ultimately affect the provision of goods and basic amenities in the budget of the coming year. For the first time in Nigeria’s history, the 2009 budget presented to the National Assembly was in deficit.”

Meanwhile all agreements on major projects in the oil sector which the Nigerian National Petroleum Corporation, NNPC, entered into with its key partners are to be reviewed. NNPC has disclosed that the action has been prompted by difficulties in funding the prime projects as a result of the present global economic crunch. The Corporation said that in order to keep the projects on course, it has adopted austerity measures in its capital expenditure and reviewed the cost of the affected projects.

Nigeria’s dependence on the highly volatile price of crude oil, coupled with ethnic violence in the Niger-Delta, is bound to impact Nigeria’s economy. It is no longer news that the Nigerian government has lost billions of dollars in oil revenue as a result of the crash in crude oil prices in the international market due to declining demand. The naira has sharply depreciated against the US dollar and other major currencies around the world. The major thing Nigeria exports is oil; that is the major source of foreign currency.

Internationals target bunker market

Nevertheless, at least until the third quarter of 2009, the West African bunker market had experienced an unseasonal 10% rise in bunker calls, according to another industry source.

At the time of the IBIA Convention, Hugues de Montauzon, managing director of Addax Bunkering Services, said that political instability in some countries, bureaucracy, port logistics and unfavourable tax regimes had slowed down the development of the West African bunker market. Nevertheless, Addax was continuing to expand its bunkering operations around Africa on the basis that the African bunkering market would continue to grow, but only integrated companies investing massively in Africa would survive. Aegean Marine Petroleum Network earlier this year bought a 11,520 dwt second-hand double-hull bunker tanker for the company’s West African operation. “Aegean has further strengthened its logistics infrastructure in West Africa,” said company president Nikolas Tavlarios. “The vessel’s significant delivery capacity extends Aegean’s reach to more markets on the Gulf of Guinea and increases sales volumes in this growing region,” he added.

Local players thrive

On the other hand there are a growing number of successful West African-based bunker suppliers, mostly Nigerian and formed within the last decade or so.

Simrad Marine, incorporated in 1999, is set to expand its bunker tanker fleet and supplies directly to major owners as well as through agents.

Another newish player is Limabase Group, specialising in sales of petroleum products, shipping and consulting services. Established in April 2005, the company has access to fully equipped laboratories approved by the Department of Petroleum Resources (DPR) for quality control purposes.

One player in the Nigerian market said: “Many European companies still see Africa as a dark hole. That is just wrong. Piracy is becoming less of a problem. The Nigerian Navy is taking effective action now. Moreover, many Nigerian companies want to do what is right.”