Nigeria’s downstream sector sees renewed activity

Nigeria's downstream oil sector is experiencing renewed activity with the government's plan to resume fuel importation from Niger Republic and the commissioning of modular refineries in the country. The Minister of State for Petroleum Resources, Timipre Sylva, defended the move, stating that it should be seen as a means of promoting intra-regional trade rather than an embarrassment. Oyeyemi Oke, an oil and gas lawyer, and partner at A02, and Kayode Akindele, Partner at TIA Capital, shared their insights on the current state of the sector and the future outlook. Oke emphasized the need for Nigeria to acknowledge its insufficient refining capacity and explore all available options to meet the demand for refined products. She pointed out that importing from Niger Republic, despite being a smaller economy, could help bridge the supply gap. Additionally, with the commissioning of modular refineries and the completion of Dangote Refinery, there is hope for increased local production. Akindele echoed the importance of pursuing both large-scale and modular refinery projects while advocating for the privatization of government-owned refineries to enhance efficiency and competitiveness. The discussion also touched on the pricing dynamics in the downstream market, with concerns raised about the impact of crude oil prices on pump prices. Oke highlighted the need for clarity in the deregulation process to ensure a fair market environment for both consumers and investors. The conversation further delved into the potential investments needed in the oil sector, with OPEC estimating a global requirement of 12.6 trillion dollars. Both experts stressed the significance of passing the Petroleum Industry Bill to attract long-term investments and create a conducive business climate. Akindele emphasized the need for Nigeria to enhance its competitive edge in the oil and gas industry by improving the regulatory framework and addressing security challenges. As the country aims to become a net exporter of petrol by 2023, strategic planning and collaboration between the public and private sectors will be crucial to sustain growth and drive innovation in the downstream sector.