MEMAN Harps Way Forward for Nigeria’s Downstream Sector
The Nigerian oil and gas industry, particularly its downstream sector, has seen significant progress in recent years, including the passage of the Petroleum Industry Act (PIA) in 2020. However, during a webinar organized by the Major Oil Marketers Association of Nigeria (MEMAN), former Chairman Olumide Adeosun pointed out that the industry is still grappling with major challenges such as fuel import dependency, weak regulation, inefficiencies in the value chain, fuel scarcity, and porous borders. Despite the emergence of new refineries like Dangote’s, Aradel’s Ogbele, and Walter Smith’s modular refineries, which have bolstered Nigeria’s fuel value chain, concerns remain. These include the potential redundancy of long-standing businesses across the value chain, fears of preferential treatment, and shrinking margins.
Adeosun emphasized that inefficient businesses will struggle unless they adapt to the demands of a more efficient, competitive landscape. He noted that these issues, although troubling, also present opportunities for improvement and growth. The webinar’s main objectives were to give stakeholders a platform to express concerns, seek common understanding, and explore business opportunities to enhance efficiency, sustainability, and productivity within the value chain.
Current MEMAN Chairman and Managing Director of NNPC Retail Limited, Huub Stokman, stressed the importance of ensuring affordable fuel supply while addressing key challenges like poor infrastructure, inefficient product distribution, and inflation. He also pointed out issues with cross-border fuel diversion and inconsistent regulation between the federal Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and various state-level bodies.
Energy security, Stokman noted, will be crucial, particularly with the operationalization of refineries like Dangote’s. He highlighted the role of the PIA in promoting competition and leveling the playing field, which will ultimately lead to better services and affordable prices for Nigerians. Moreover, the introduction of Compressed Natural Gas (CNG) and Liquefied Natural Gas (LNG) presents an opportunity to diversify energy options in line with global energy transition goals.
Responding to questions on price differentials and petroleum product diversion, former MEMAN Chairman Adetunji Oyebanji explained that market dynamics, driven by landing costs, create imbalances where operators may seek more profitable markets, contributing to smuggling and inefficiencies. He called for better market deregulation and the proper implementation of the PIA to ensure a fair, market-based pricing system that curbs such issues.
Oyebanji concluded by advocating for consistent stakeholder engagement through forums to address industry-wide problems rather than relying on sporadic press statements that lead to unnecessary conflicts. He also reaffirmed MEMAN’s commitment to collaborating with other stakeholders to find lasting solutions to the challenges facing Nigeria’s oil and gas industry. Full PIA implementation, he believes, will pave the way for growth and stability in the sector, despite the teething challenges currently being faced.
