A Review of the Nigerian Energy Industry

Downstream players urged to expand capacity

Senator David Mark11 November 2013, Lagos – Downstream players in Nigeria’s petroleum industry have been challenged to expand capacity through the construction of refineries to become net producers of petroleum products in the country. By so doing, they will become competitive at the international level.

Speaking on downstream competitiveness at the just-concluded, Oil Trading Logistic Expo, OTL in Lagos, Senate President, David Mark, said Nigeria, especially operators in the downstream sector must relate to what is happening in the international market.

He stressed that Nigeria must be ready to relate international competitiveness to the nation’s capacity to expand values and the capacity to become not just marketers in the downstream sector but indeed producers, refiners and in adding values to the nation’s God given product.

Mark argued that Nigeria’s downstream sector is profitable and will remain profitable essentially if the operators remained efficient middlemen, or at the very best, strategic margin traders by importing products and selling at the margin.

Mark continued, “In dealing with the theme of the conference, one is forced to ask, Why are we talking of competitiveness? Is it competitiveness between MRS and Total? Or are we talking about competitiveness on an international scale because the petroleum industry is an international industry. And if you are gathering here to discuss competiveness, we must discuss the capacity of Nigeria to compete with other companies at the international level and in that respect, I am force to question whether we have actually identify the true principles of such international competiveness.

“Nigeria downstream sector is profitable and may remain profitable essentially by being efficient middle men or at the very best strategic margin traders by importing products and selling at the margin. But in terms of adding value to the Nigeria economy, in terms of competitiveness as a country and as an industry in an international environment, are we actually competitive? This is the question that I except the organisers, participant, speakers and all stake holders can provide answer.

“If you are talking about local competitiveness that is a different conversation, if you are talking about competitiveness in the downstream sector of our economy, then we must relate it to what is happening in the international market, we must relate it to our capacity to expand values, we must relate to our capacity to become not just marketers but indeed producers, refiners and in other ways adding values to the product that is already given to us by God Almighty.

The Senate President who was represented by the Chairman, Senate Committee on Petroleum (Downstream), Senator Magnus Abe, further said: “My brother has already mentioned the examples of countries that don’t even have the advantage that Nigeria has in that we actually have the raw material which is the foundation product for the industry. But others who don’t have that advantage are even more competitive than us. I expect that these are some of the questions that would be answered by this conference.

“I hope we would be able to have a ground plan for moving the industry forward not just as marginal traders and as marketers but indeed as producers and internationally competitiveness in the global market.

PIB and the economy
In his opening remarks, the Speaker of the House of Representative, Aminu Tanbuwal, acknowledged the critical role of the Petroleum Industry Bill, PIB, in revolutionising the country’s economy.

He encouraged downstream operators to define strategies that would encourage indigenous sustainability after the passage of the Petroleum Industry Bill, PIB which we hope would be pass very soon adding that “We must ensure that aside from what is up to date in the industry, we must show commitment in partnership and we must apply the best international standards in our business practices.”

He appealed to operators and stakeholders at large to see what can be done to help the transition of being an almost net importer of petroleum products to an exporter of petroleum products.

“The gathering therefore provides a robust platform to share information on the challenges in our own industry as well as the solutions to the various issues that urgently need attention.

Consequently, I enjoined all of you to use this platform to define strategies that would encourage indigenous sustainability after the passage of the Petroleum Industry Bill, PIB which we hope would be pass very soon. We must ensure that aside from what is up to date in the industry, we must show commitment in partnership and we must apply the best international standards in our business practices.

“Let me also appeal to our stakeholders to see what we can do to help the transition of being an almost net importer of petroleum products but an exporter of petroleum products. In this instance, the example of Singapore is point. This is a nation with no drop of oil but it is a net exporter of petroleum products. I see no reason why Nigeria cannot do the same with the abundant of crude oil in our soil.

“My brothers and sisters, at the National Assembly we acknowledge that the Petroleum Industry Bill holds the key to a brighter tomorrow to Nigeria oil and gas sector and indeed we are committed to the passage of the bill because we have realize how important it is to the economy of Nigeria.

The speaker of the House who was represented by Chairman House Committee on Petroleum (Downstream), Hon. Dakoko Peterside, said “Now that we are at the critical stage to the debate of the bill, I assure you that we would put the very best towards the passage of the all important bill and the view of every stakeholder would be definitely be counted in the passage of the bill.
*Vanguard

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