With Nigeria getting closer to becoming a net exporter of petroleum products, the Federal Government yesterday began moves to create a petroleum products trading and pricing market for the West African subregion.
The government said the target is to make the country a crude oil reefing hub and a centre for trading in petroleum products.
Speaking at the opening of a 2-day West Africa Refined Products Pricing and Market Development Conference organized by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), the Minister of State Petroleum Resources (Oil), Senator Heineken Lokpobiri said the government would continue to support local refineries.
He urged African countries to reverse the trend of exporting raw materials and importing finished goods, adding that local companies must learn to add value to local raw materials.
“For Africa to fully benefit from this trade, we need to grow our refineries. The Dangote Refinery is laudable and that is why we are supporting it. The target is not just for it to supply the Nigerian market alone but be able to service other African countries.
“Our own ambition is to grow the sector and partner with our neighbours in West Africa to make Nigeria hub for energy trading for the benefit of those who need energy in this part of Africa”, he added.
Earlier, the Authority Chief Executive, NMDPRA, Engr. Farouk Ahmed said despite being a significant producer of hydrocarbon resources, an important consumer of refined petroleum products and a growing refining hub, West Africa continues to depend on posted prices of global reference markets for all its trading activities.
Ahmed pointed out that while these benchmarks “are globally accepted, often they do not reflect the unique supply chain peculiarities, market dynamics, and economic realities of the African continent.
“A regional pricing benchmark that promotes price discovery, transparency, deepened market development and enhanced availability of energy has then become a strategic objective that requires the collaborative action of all the stakeholders that are major players in this market”.
He said establishing a regional pricing reference point would facilitate growth of trading of petroleum products in the region, establishment of additional storage and supply infrastructures to accommodate the growing volumes of trading activities and real-time pricing data that is reflective of the peculiarities of the West African market fundamentals.
On his part, the Group Chief Executive of NNPC Limited, Bayo Ojulari harped on the importance of growing Africa’s refining capacity.
“The vision of an African refining hub is therefore not an aspiration. It is essential. But vision without execution is hallucination. Without execution, we must confront structural bottlenecks, including chronic underinvestment in refining and mixing infrastructure, fragmented and often contradictory regulatory frameworks, policy inconsistency that stalls investment, skills gap, and limited local development. Still, these are not insurmountable. They are catalytic opportunities if met with coordinated action, bold investment, and resolute leadership”, Ojulari stated.
Dangote blames IOCs for crude oil shortage
Speaking of his experience, the President of the Dangote Group, Alhaji Aliko Dangote disclosed that International Oil Companies (IOCs) remain the biggest challenge to the supply of crude oil to the 650,000 barrels per day Dangote Refinery.
Dangote said the refinery has had to rely on the importation of about 9-10 million barrels of crude oil monthly from America and Europe to remain operational.
“Rather than buying crude oil directly from the Nigerian producers at competitive terms, we found ourselves having to negotiate with international trading companies who were buying Nigerian crude and reselling it to us with hefty premiums. Of course, as we speak today, we buy about 9 to 10 million barrels of crude monthly from the United States and other countries.
“IOCs have been the most difficult part of our journey. Even after scaling the crude, transporting it became another bottleneck. And lifting schedules were constantly shifted by upstream operators, and we were hit with excessive port and regulatory charges”.
Despite the challenges, he said the company has been able to export one million tons of petrol in the past 50 days.
He listed technical, commercial and contextual challenges as the difficulties for anyone attempting to build a refinery in Nigeria, adding that “we may never see any new refinery being built in this country in our lifetime, if these challenges remain”.
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