By Julia Payne
LONDON (Reuters) -Nigerian fuel retailer MRS Oil Nigeria said on Wednesday gasoline it had received from Litasco, the Swiss trading arm of Russia’s Lukoil, was unusable.
The west African country faces fuel shortages after gasoline was delivered with too high a content of methanol. Methanol is a regular additive to gasoline in small amounts. Nigeria depends almost entirely on imports to meet its domestic gasoline needs.
Nigeria’s minister of state for petroleum said on Wednesday the government will set up an investigation into sub-standard fuel deliveries.
A Litasco spokeswoman declined to comment on MRS Oil Nigeria’s allegation when approached by Reuters.
But she said the company was not involved in the entire supply chain and therefore “has no control over deviations to the quality of products occurring after their delivery by our company”.
Nigeria’s state oil firm NNPC told fuel traders on Wednesday gasoline deliveries could no longer contain the additive methanol, three sources with direct knowledge said.
MRS said it received the oil from Litasco via Nigeria’s NNPC at the end of January and 37,000 tonnes were delivered to multiple retailers in the country. Trading sources familiar with Nigeria said the off-spec fuel had caused widespread disruptions, affecting more volume than described by MRS.
“NNPC through their trading arm Duke Oil, supplied a cargo of PMS (petrol) purchased from international trader Litasco and delivered it with Motor Tanker (MT) Nord Gainer,” MRS said in a statement.
“Following delivery into tank, it was observed that the product appeared hazy and dark…The product analysis revealed that the PMS discharged by MT Nord Gainer had 20% methanol.” Typical methanol amounts in gasoline are 2-3%, oil traders said.
NNPC has not responded to multiple Reuters’ requests for comment regarding MRS, Litasco and the gasoline supply chain.
Norden, the operator of the MT Nord Gainer, said it did not have a contractual agreement with Litasco on this specific voyage.
“The cargo onboard was loaded and discharged in accordance with the contract between us and our client,” the tanker operator said, without clarifying further.
About 1.2 million tonnes of gasoline was delivered to west Africa from Northwest Europe in January, broadly in line with December, according to Refinitiv Eikon data. Nigeria accounts for most of the demand.
NNPC handles nearly all these imports through crude-for-fuel contracts, known as direct sale, and direct purchase (DSDP), with consortia of local and foreign oil firms.
NNPC has asked trading firms for emergency supplies of gasoline to replace cargoes that were rejected because of their poor quality. NNPC has not commented on this request nor the deliveries of unusable gasoline.
On Tuesday, the Nigerian Midstream and Downstream Petroleum Regulatory Authority said it found gasoline with methanol above national specifications in the supply chain and removed the fuel from circulation.
(Reporting by Julia Payne; additional reporting by Ahmad Ghaddar in London; Chijioke Ohuocha in Abuja and Macdonald Dzirutwe in Lagos; Felix Onuah in Abuja; Editing by Jon Boyle, Barbara Lewis and Jane Merriman)
