Stabilising oil industry – The Nation Newspaper

Aside from the crude oil production that has soared by nearly one million barrels per day, the turbulence that permeated the downstream industry upon the removal of petrol subsidy has calmed down with wet retail outlets and crashing pump prices, JOHN OFIKHENUA reports

So soon, the endless queues around Premium Motor Spirit (PMS) petrol retail outlets have disappeared. The magic stemmed from the stability in the downstream sector. It is now based on market forces in accordance with the implementation of the Petroleum Industry Act (PIA).

The calm came on the heels of the determination of the Minister of State Petroleum Resources (Oil), Senator Heineken Lokpobiri to leverage the law instead of unnecessary interference or discretion. To him, the law and nothing else should determine the operator’s decisions. Even in the face of disputes among parties in the industry, he advised them to settle amicably in line with the stipulations of the legislation.

While the petrol prices were in the upward swing, he described it as a commercial matter emanating from the deregulation of the industry. To him, allowing the market fundamentals to regulate the market guarantees a steady supply of products for the much needed energy security. The last yuletide was stress free because the petrol stations were wet. This season, too, the product is everywhere with the prices nosediving.

Elated that consumers were not falling over one another to access the fuel during the 2024 Yuletide, the minister  shared his experience of different prices in Bayelsa State. His words: “During the Christmas season, I was in Bayelsa, and I tried to go around different filling stations.

 “Some filling stations were selling N1,020, others were selling N999, while others were selling N1,015. The whole essence of deregulation is for the price to find its level. Before now, you will agree with me that every day you hear negative news about petrol subsidies. Today, you journalists have no negative news about petrol subsidies because it is completely regulated, and the price will find its level. As the oil price goes up, petrol price will go up, and as oil prices come down, the price will come up.”

Being an outcome of the huge growth in the midstream with the $20 billion Dangote Refinery and a pocket of other modular refineries in the country, the implementation of the PIA under the watch of the minister has resulted in a competitive but stable industry. Call it the outcome of the price war or something else, the midstream and downstream are now stable and have freed the country from fear of supply shortage.  This is so because of the government’s refusal to interfere with the market forces. Since the PIA emphasizes domestic refining, import substitution and also leaves a breathing space for importers of products, players are allowed to operate to guarantee energy security. Interestingly, the Dangote Refinery has been very innovative in the competition. The company’s activities have crisscrossed refining to distribution to the end-users. This measure has helped him to cut out the cost of outsourcing haulage to middleman as he has already procured about 4,000 Compressed Natural Gas CNG (CNG) fired tankers to ferry the products nationwide. During the yuletide, he directed his affiliate petrol station MRS to vend petrol for N739 per litre. His other affiliates which look forward to receiving the free delivery from the refinery very soon are also optimistic they would crash their pump prices next week. In all, the consumer seems to be the beneficiary as the further competitions are likely to flatten the price curve.

On his own, Lokpobiri harps on domestic refining for lower prices and  job creation. He sees it as a catalyst for the complete stabilization of the industry. His tour of Ebenco Modular Refinery in Koko Delta State on November 21 was an eye opener on where he stands as he made a case for the local industry.  He urged illegal operators to emulate Ebenco to formalize their refineries. He pledged the government’s support for their take off. He said the initiative will not only save the environment but it will also stabilize the industry with a plausible solution to the headache of illegal refining, crude oil theft and pipeline vandalization. The minister said, “The government is  really committed to promoting local companies like Ebenco. It is committed to partnering with companies towards solving some of the problems that we are having. One of the biggest questions I ask people who are doing coal fire refining, why can’t we have improved machinery that could be used to refine this crude and resold to these men who are breaking pipelines and stealing the crude? Why can’t we work out an institution where we can have an improved refining like Ebenco is doing replicate it across?Today, I am here to find an answer to that question. If Ebenco is able to build a refinery that will refine products that meet international standards, it is easier for the government to.come up with fund and procure that and then give to different groups across the country.They will be given crude and pay for it in Naira the dollar equivalent because crude is sold in dollar. So even if you want to pay in dollar it has to be on the prevailing exchange rate.”

Instead of someone going to China to look for refineries, you have brought the Chinese partner here who will do all the things and come up with quality refining.”

From the 650,000 barrel per day refinery, Nigeria is also an exporter of petroleum products to far and near.  While other plants are at different stages of establishment, new modular refineries are springing up to compliment the existing ones.

From the upstream, due to his supervision, crude oil production which plummeted to as low as 1.1million barrels per day has soared to about 1.8mb/d.

On assumption of office, he was emphatic on his measure to address low output. He vowed to storm the creek. The minister has not limited is stance on the matter to the eloquent vow that elicited an applause, he has met traditional rulers in the Niger Delta to address the menace. Apart from that, he has engaged the security forces and players in the industry to create a peaceful atmosphere for production to thrive.

With peace in the Niger Delta, several shut- in wells have been reopened to boost production. Similarly, marginal fields from the 2024 bid round are now contributing to the basket.

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In 2025 alone, 28 new Field Development Plans have already been approved, while an additional 1.4 billion barrels of oil have been unlocked.

Throwing more light on the flourishing upstream operation, the former Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Engr. Gbenga Komolafe said, “These projects are expected to add nearly 600,000 barrels of oil per day and more than 2 billion standard cubic feet of gas per day, supported by $18.2 billion in committed CAPEX. Together, these outcomes demonstrate that Nigeria’s upstream sector is not only on a growth trajectory but is also attracting the scale of investment needed to sustain its role as a premier global energy hub.”

Following the thoughtfulness and thoroughness of the government, the industry concluded the divestments of International Oil Companies (IOCs) divestments of onshore assets from Shell, Total Energies, ExxonMobil and Eni to indigenous firms. The deal has potentially opened several opportunities with the potential to raise local control to 70 per cent of output.

Already some of the companies have raised their production profile with the assets as hope abounds that the deal will culminate in the retention of profits in the country. Expectedly , this will further strengthen the nation’s earning from the industry and also stabilize the economy.

The oil industry is now attractive to international oil companies (IOCs) that left Nigeria. Already, it has attracted $16 billion investments.

As advocate of a fair and just energy transition, Lokpobiri has calmed the confused operators that Nigeria will not abandon its oil resources while the western world with their industrial companies that generated the carbon emissions which resulted in climate change sustain their operations in the industry. In order to compel Africans to abandon their oil deposit, international investors have cleverly withdrawn their funding of hydrocarbon projects for several years. The minister and other members of the African Petroleum Producers Association (APPO) who considered the stifling of fund a ploy to force developing countries abandoned their resources have teamed up to establish the $5 billion  African Energy Bank (AEB) to mobilize funding for the industry in the continent. Essentially, the step is to stabilize and strengthen the industry in Nigeria and by extension in Africa. The bank’s corporate head office in Abuja Nigeria is now set and awaiting the Afrexim Bank and APPO for commissioning.  After inspecting the bank a few weeks ago, the minister insisted that Nigeria has fulfilled its obligations as the host country.

“I came to inspect the headquarters furnishing of the Africa Energy Bank and I am happy to disclose to the world and Nigerians and Africans that Nigeria has delivered on all the obligations made for us to fulfill as host country.

“The headquarters is ready, tastefully furnished in the best location and so we are ready for the bank to take off. So we are waiting for, you know, APPO and African Exim Bank that are the drivers of this process, you know, to facilitate the takeoff,” he said

Prior to this year, Nigeria had no record of any indigenous  onshore crude oil export terminal in the last 50 years. But working closely with the ministry, the Green Energy International Limited (GEIL) has completed and commissioned its  $400million Otakikpo Oil Export Terminal to lessen evacuation issues in the country.

According to the minister, the terminal will give access to the evacuation of stranded oil fields in the country.

Lokpobiri said, “The Otakikpo terminal will not serve GEIL production but will also open an efficient evacuation outlet for the marginal and stranded fields across this region, unlocking billions of barrels of reserves and creating values for our economy.”

The country’s national oil company was able to make N5.4 trillion profit in 2024. This was largely due to the relative peace in the industry.

From upstream to downstream, the oil sector has recorded significant stability in the last two years because the ministry has shunned whatever would drag down progress. As the dream of 2.5million barrels per day in 2026 stares the ministry in the face with a recovery petrol market, Nigerians look forward to the renewed oil industry.