Olufemi Adeyemi

The downstream oil sector in Nigeria should undergo complete deregulation, according to petroleum marketers, refiners, and depot owners. They are requesting the elimination of government-imposed price controls linked to subsidies.

This initiative was highlighted during a webinar hosted by the Major Energies Marketers Association of Nigeria, in partnership with the Depot and Petroleum Products Marketers Association of Nigeria, the Crude Oil Refiners Association of Nigeria, the African Refiners and Distributors Association, and the Petroleum Products Retail Outlets Owners Association of Nigeria.

The event, titled ‘Optimising the Nigerian Oil and Gas Industry,’ convened key industry stakeholders to address the challenges, opportunities, and strategic measures necessary for improving the sector's efficiency and sustainability.

According to a communique released by MEMAN, participants examined the effects of recent increases in petroleum product prices and stressed the importance of full market deregulation.

They advocated for a pricing mechanism driven by market forces to enhance competitiveness and operational efficiency, asserting that the removal of government price controls is crucial for creating a more agile and responsive industry.

The call for total deregulation and market liberalization was emphasized, with anticipated benefits including greater efficiency, improved product availability, and heightened private sector involvement.

Additionally, there was a strong focus on bolstering local refineries to reduce reliance on imported petroleum products.

Stakeholders urged for the freedom of marketers to source crude oil from both local and international markets and for refineries to establish processing agreements with retail companies.

The discussions also highlighted the necessity of transitioning to cleaner energy alternatives, such as Compressed Natural Gas and Liquefied Petroleum Gas.

Stakeholders have proposed the creation of a new committee framework within the petroleum sector, drawing inspiration from Nigeria's Bankers’ Committee.

This proposed structure would feature a Midstream and Downstream Industry Coordination Committee aimed at improving collaboration in these areas, with leadership provided by the Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority.

Additionally, they suggested the formation of an Industry Interface Committee to oversee interactions between the upstream and downstream sectors, as well as a Petroleum Industry Consultative Assembly that would unite stakeholders from various segments of the oil and gas industry, chaired by the Minister of State for Petroleum Resources (Oil).

The objective of these committees is to promote collaboration, ensure adherence to regulations, facilitate conflict resolution, and offer strategic oversight, similar to the functions of the bankers’ committee in the financial sector.

The communique highlighted that the establishment of these consultative committees is intended to boost collaboration, drive innovation, and resolve conflicts, while addressing inefficiencies in the supply chain and infrastructure challenges deemed essential for long-term sustainability.

Furthermore, oil sector investors have called for substantial investments in infrastructure to improve the distribution and storage of petroleum products. They advocated for the integration of new technologies to optimize supply chains, curb smuggling, and prevent product adulteration.

Business owners also stressed the importance of adopting sustainable practices, such as minimizing gas flaring, encouraging the use of renewable energy, and investing in carbon capture and storage technologies to meet global sustainability objectives.

They underscored the necessity for a clearer and more supportive regulatory framework, referencing the Petroleum Industry Act and its provisions, and emphasized that improved policy implementation is crucial for facilitating licensing, investment, and refinery operations.

The webinar underscored Nigeria’s potential to emerge as a notable producer of plastics and petrochemical products. Stakeholders engaged in discussions centered around capitalizing on the nation’s abundant natural gas resources to foster the development of a robust petrochemical industry. This strategic move would effectively reduce import reliance, generate employment opportunities, and bolster the local economy.

Emphasis was placed on the imperative to establish the requisite infrastructure, including petrochemical complexes, and implement policies that incentivize domestic manufacturing and value addition. The transition towards indigenous plastics production aligns seamlessly with the broader strategy of industrial diversification and economic resilience.

In conclusion, all stakeholders pledged to collaborate in optimizing the Nigerian oil and gas industry. They emphasized the significance of strategic investments, policy reforms, and innovative practices that adhere to international standards and sustainability objectives.

The proposed formation of the petroleum committee will serve as a pivotal platform to foster collaboration and guide the industry through its ongoing transformation,” the statement indicated.