Nigeria is advancing plans to become the crude oil refining and petroleum products trading hub for West Africa, aiming to reduce regional dependence on imported fuels and strengthen local refining capacity.
This initiative was highlighted at the West Africa Refined Products Pricing and Market Development Conference organized by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).
The government’s strategy focuses on creating a regional petroleum products trading and pricing market that reflects West Africa’s unique supply chains and economic realities, rather than relying on global pricing benchmarks from distant markets.
The Minister of State Petroleum Resources emphasized support for local refineries, including the Dangote Refinery, encouraging African countries to add value locally by expanding refining capabilities.
Despite recent investments, West Africa still imports about 69% of its gasoline supply, highlighting the urgent need for integrated regional market development.
NMDPRA’s Chief Executive, Farouk Ahmed, explained that the lack of regional price indices hampers transparency and investment, prompting a collaboration with S&P Global Commodity Insights to develop refined petroleum products price indices tailored to West Africa.
The Nigerian National Petroleum Company Limited (NNPC)’s Group Chief Executive, Bayo Ojulari, underscored the importance of addressing structural challenges such as underinvestment, regulatory fragmentation, and skills gaps to boost Africa’s refining capacity.
Separately, Aliko Dangote, President of Dangote Group, pointed to challenges in sourcing crude oil locally from Nigerian producers, revealing that his refinery imports about 9 to 10 million barrels monthly from the US and Europe due to bottlenecks with International Oil Companies (IOCs).
Despite these hurdles, Dangote disclosed the successful export of one million tons of petrol recently, signaling Nigeria’s growing capability in refined product production and trading.
Nigeria’s strategic deep seaports and improving maritime infrastructure position it favorably as a fuel distribution hub, poised to expand its influence in West African petroleum markets.
The government’s reforms, including the Petroleum Industry Act 2021 and downstream sector liberalization, create a conducive environment for investment and market integration across the region.
Overall, Nigeria’s push towards a West African regional market for petroleum product trading aims to enhance energy security, foster economic growth, and diminish the continent’s reliance on imported refined fuels.
