By Onuora Aninwobodo
The Petroluem Products Retail Outlets Owners Association of Nigeria (PETROAN) has appealed to President Bola Tinubu to approve ₦100bn grant to help oil marketers stay afloat.
In a statement released on Saturday, titled PETROAN’S Retrospect of Nigeria’s Oil and Gas Downstream Sector 2024, the association listed several groundbreaking moves in the sector in the outgone year.
But it recommended the privatisation of “Nigerian-owned refineries, such as the Warri and Kaduna refineries, to reputable private companies to improve efficiency and reduce government spending”.
Petroan, in a statement signed by its President Billy Gillis-Harry, national secretary Adedibu Aderibigbe, and spokesman Joseph Obele, said the grant request is to avoid the closure of oil marketers’ businesses.
This, it said, is “to help prevent the closure of 10,000 marketers’ businesses. The request is in response to the threat of job losses that would result from the removal of the fuel subsidy.
The association called on authorities to work with “neighbouring countries to strengthen border security and prevent smuggling, and also utilize digital tracking systems to monitor petroleum products from refineries to retail outlets.
“To boost Nigeria’s refining capacity and reduce reliance on imported petroleum products, we strongly recommend that crude oil be made available for local refineries,” the statement read.
“This strategic move will have a positive impact on the country’s economy and energy security. By prioritizing local refineries’ access to crude oil, Nigeria can unlock the full potential of its refining sector, drive economic growth, and enhance energy security.”
Since the removal of fuel subsidy in May 2023, the cost of the essential commodity has moved from around ₦170 to about ₦1,000 in several parts of the country.
But PETROAN wants a “competitive market by encouraging new entrants and promoting a level playing field to prevent monopolies and ensure fair pricing”.
Read the statement in full:
PETROAN’S RETROSPECT OF NIGERIA’S OIL AND GAS DOWNSTREAM SECTOR 2024
As the year 2024 comes to an end and rolls into 2025, PETROAN reflects on the significant events, trends, and challenges that shaped Nigeria’s oil and gas downstream sector. This retrospect will examine the key developments, policy changes, and industry milestones that impacted the sector.
DEREGULATION AND PRICE STABILITY
One of the most notable developments in 2024 was the continued deregulation of the downstream sector. The Nigerian government’s decision to remove subsidies on petroleum products led to a more market-driven pricing regime. Although this move was met with initial resistance, it ultimately resulted in price stability and reduced the burden on the government’s finances.
INCREASED INVESTMENT IN INFRASTRUCTURE.
The year 2024 witnessed significant investments in downstream infrastructure, including the rehabilitation and expansion of existing refineries, pipelines, and storage facilities. The Nigerian National Petroleum Corporation (NNPC) Limited and private sector players collaborated on several projects aimed at improving the country’s refining capacity, reducing reliance on imported petroleum products, and enhancing overall efficiency.
REHABILITATION AND COMMENCEMENT OF PRODUCTION AT PORT HARCOURT REFINERY
A major milestone achieved in 2024 was the successful rehabilitation and commencement of production at the Port Harcourt Refinery. This development marked a significant step towards increasing Nigeria’s refining capacity and reducing dependence on imported petroleum products. The refinery’s restart is expected to have a positive impact on the country’s energy security and economy.
EMERGENCE OF DANGOTE REFINERY AND PRICING COMPETITION.
Another significant development in 2024 was the commencement of operations by the Dangote Refinery, the largest single-train refineries in the world. The refinery’s entry into the market introduced a new dynamic, particularly in terms of pricing competition. The Dangote Refinery’s prices were initially competitive, putting pressure on the NNPC Limited to review its pricing strategy. This competition ultimately benefited consumers, who enjoyed relatively stable and lower prices for petroleum products.
CNG IN NIGERIA 2024
Nigeria’s Compressed Natural Gas (CNG) sector witnessed significant growth in 2024.
Increased investment in CNG infrastructure expanded access to cleaner energy.
The Nigerian government’s policies supported the development of the CNG market.
However, challenges persisted, hindering the sector’s full potential.
CHALLENGES OF CNG IN NIGERIA
Inadequate infrastructure, including limited CNG stations and distribution networks.
High operating costs, including the cost of compressing and transporting natural gas.
Limited public awareness and acceptance of CNG as a viable alternative fuel.
Inadequate regulatory frameworks and policies to support the development of the CNG market.
Security concerns and vandalism of CNG infrastructure.
Difficulty in converting existing vehicles to run on CNG.
Limited availability of CNG-compatible vehicles.
High initial investment costs for establishing CNG stations and infrastructure.
GROWTH OF OF THE LPG MARKET.
Nigeria’s Liquefied Petroleum Gas (LPG) market experienced remarkable growth in 2024, driven by increasing demand for cleaner energy sources and government initiatives to promote the use of LPG. The expansion of LPG infrastructure, including storage facilities, terminals, and filling plants, supported this growth.
NIGERIA’S OIL SECTOR WITNESSES RESURGENCE
Nigeria’s oil sector witnessed a remarkable resurgence in 2024, with daily crude oil production reaching an impressive 1.8 million barrels per day.
This feat marks a 15-year record, showcasing the country’s determination to reclaim its position as a leading oil producer.
The significant increase in oil production is a testament to the government’s efforts to revamp the sector.
This achievement is expected to have a positive impact on the country’s economy, generating more revenue and creating employment opportunities.
The oil sector’s growth in 2024 is a promising sign for Nigeria’s economic development in the years to come.
As the country looks to the future, it is clear that the oil sector will continue to play a vital role in Nigeria’s economic growth.
PETROAN’S RECOMMENDATIONS FOR NIGERIA DOWNSTREAM SECTOR 2025
Based on PETROAN’s observations, the following recommendations are made to ensure the effectiveness and efficiency of the downstream sector in 2025:
1. – Privatization of Nigerian-Owned Refineries_: Privatize Nigerian-owned refineries, such as the Warri and Kaduna refineries, to reputable private companies to improve efficiency and reduce government spending.
2. – _Encouragement of Competition_: Foster a competitive market by encouraging new entrants and promoting a level playing field to prevent monopolies and ensure fair pricing.
3. – _Enhance Transparency and Accountability_: Establish a robust monitoring and evaluation framework to track the performance of downstream operators and ensure compliance with regulatory requirements.
4. – _Invest in Infrastructure Development_: Continue to invest in critical infrastructure and preventive maintenance, such as refineries, pipelines, and storage facilities, to improve the country’s refining capacity and reduce reliance on imported petroleum products.
5. – _Enforcement of Local Content Development_: Encourage the development of local content by supporting indigenous companies and providing incentives for research and development in the downstream sector.
6..To enhance the effectiveness of CNG in 2025, the government should invest in expanding CNG infrastructure.
Private sector participation should be encouraged to increase access to funding and expertise.
Regulatory frameworks should be reviewed to reduce operational costs and attract investment.
Stakeholder engagement and awareness campaigns should be intensified to promote the adoption of CNG.
6. Addressing Cross-Border Smuggling of Petroleum Products..
Collaborate with neighboring countries to strengthen border security and prevent smuggling.and also Utilize digital tracking systems to monitor petroleum products from refineries to retail outlets.
7. Prioritize Local Refineries’ Access to Crude Oil
To boost Nigeria’s refining capacity and reduce reliance on imported petroleum products, we strongly recommend that crude oil be made available for local refineries. This strategic move will have a positive impact on the country’s economy and energy security.
By prioritizing local refineries’ access to crude oil, Nigeria can unlock the full potential of its refining sector, drive economic growth, and enhance energy security.
8. (PETROAN) request for a grant of ₦100 billion from President Bola Tinubu to help prevent the closure of 10,000 marketers’ businesses. The request is in response to the threat of job losses that would result from the removal of the fuel subsidy.
CONCLUSION
In conclusion, 2024 was a significant year for Nigeria’s oil and gas downstream sector, marked by deregulation, infrastructure investments, and growth in the LPG market. The rehabilitation and commencement of production at the Port Harcourt Refinery, as well as the emergence of the Dangote Refinery, were notable highlights. While challenges persist, the sector is poised for continued growth and development in the years to come. As the industry navigates the energy transition and embraces new technologies, it is essential for stakeholders to remain adaptable, innovative, and committed to sustainable development.”
