The Dangote Petroleum Refinery partnered with major fuel marketers to safeguard nationwide supply and reduce risks associated with a single-source system, the Major Energies Marketers Association of Nigeria has said.
Speaking during a MEMAN webinar on Tuesday, the association’s Chairman, Hubb Stokman, said the supply arrangement with marketers was designed to improve efficiency and address concerns around concentration risk in the downstream sector.
He noted that while Nigeria now has a large refinery capable of meeting most of its domestic needs, relying heavily on a single facility comes with inherent risks.
“I think that Nigeria is actually very blessed with having a refinery. Sometimes you forget, in a situation like this with the crisis in the Middle East, that having a refinery that can produce a large part, if not almost everything, that the country needs is a huge benefit,” he said, adding that Nigeria should count its blessings in that regard.
Stokman, however, added that the size and dominance of the refinery also necessitated deliberate efforts to spread supply channels.
“Now, one of the things is, of course, when you get a huge, mega refinery that can produce almost anything and everything that the country needs, it’s all concentrated in one place.
“So actually, this supply arrangement and selling to MEMAN members and other major marketers was mainly based also on making sure to address a little bit the risk of having one single big place to get all the products from, and also make it operationally efficient.”
He explained that the arrangement was also carried out in consultation with regulators to ensure it aligns with market realities and enhances distribution efficiency. “And I think they did that by talking also to the regulator to make sure what makes sense,” he added.
Stokman said the current global oil market volatility, triggered by the Middle East crisis, had reinforced the need for flexibility in supply arrangements. He said the crisis in the Middle East happened a couple of days after the purchase arrangement was communicated.
“And when the crisis happened, of course, everybody’s prices changed. It’s all a bit up in the air because it’s moving so fast. Don’t forget, the crisis in the Middle East is only two weeks old, and it happened basically a couple of days after this arrangement was communicated,” he said.
He noted that despite the volatility, the Nigerian market has so far responded positively because the arrangement was working. However, he warned that Nigeria needs to remain agile in a volatile environment in order not to be bogged down.
“So, I think so far, it’s been working. But I think we need to realise that in these kinds of fast-volatility environments, you need to remain agile.”
He warned against rigid approaches to market management, stressing the need for continuous adjustment in response to global developments. “I think that’s always the key thing. Don’t get bogged down in one way sometimes. But I must say, I’m very impressed with how the refinery is dealing with it and also the market,” Stokman added.
The MEMAN chairman further stated that Nigeria’s fuel pricing continues to reflect international market trends, as the deregulated system tracks global benchmarks. “The prices in Nigeria have followed, let’s say, import parity and the international market. So in that sense, I think the market has responded very quickly,” he said.