In Landmark Move, S&P Opens New Abuja Office, Cautions against Subsidy Return 

 FG vows deeper partnership with global energy intelligence firm

Emmanuel Addeh in Abuja

In what could deepen Nigeria’s engagement with one of the world’s leading energy intelligence and market information providers, S&P Global Energy yesterday officially opened its new Abuja office, with the Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, pledging closer collaboration between the company and Nigeria’s energy sector.

The opening brought together senior Nigerian oil and gas stakeholders and executives of S&P Global, with the company signalling a growing focus on Nigeria and the wider West African energy market amid major changes in the region’s refining and petroleum products landscape.

In his remarks, Lokpobiri described S&P Global as strategic to Nigeria’s energy sector, saying the federal government was committed to strengthening the existing relationship with the global energy intelligence and consulting firm.

“S&P Global is very strategic to our energy sector. We have an existing relationship, and we are committed to ensuring that Nigeria does not take that relationship for granted,” he said.

The minister expressed satisfaction that S&P Global had chosen Abuja as the location for its new office, noting that he had previously advocated a stronger presence of the company in Nigeria’s capital. It is our pleasure that you chose to come to Abuja, in particular. I have always wanted S&P Global to be here,” Lokpobiri said.

Recalling his previous engagement with representatives of the company in Cape Town, the minister said the new office would provide a platform for deeper interaction between S&P Global and stakeholders in Nigeria’s energy industry.

“I am very happy that you and your colleagues from all over the world have decided to come to Abuja to be part of this occasion. I congratulate you, and we look forward to working very closely with S&P Global,” he added.

Lokpobiri said Nigeria would continue to position itself within the changing global energy landscape, stressing the importance of partnerships with international companies with expertise in energy intelligence, market data and analysis.

The opening of the office comes as Nigeria’s refining capacity expands and the structure of the West African petroleum products market changes, creating new opportunities for regional pricing and market benchmarks.

Speaking at the event, the Executive Director, Strategy and Benchmarks, S&P Global Energy, Joel Hanley, said Nigeria and the wider West African region has the potential to emerge as an important energy pricing hub.

Hanley said the growth of domestic refining capacity, particularly the Dangote refinery, had altered the regional petroleum products market and created a case for pricing benchmarks that more closely reflected local market conditions.

“For many years we’ve seen the pricing linked. People have been pricing their cargoes coming into West Africa from European assessments, European benchmarks. Now, they’re excellent benchmarks, but they reflect the local European market. So in order to have a price assessment or a benchmark that is more reflective of the local market, for me, I think it probably makes sense to make sure that we’re assessing markets in Lekki and Lomé and Lagos,” Hanley explained.

He said S&P Global was increasingly focused on developing market assessments that reflected supply and demand conditions within West Africa as the region’s energy market evolved.

The company also raised concerns around the possible return of fuel subsidy, with Hanley saying market participants had expressed opposition to such a policy on the grounds that it could complicate the development of a free and transparent regional petroleum products market.

“There was quite a deep-seated feeling against the return to subsidy. It makes things difficult for a free market. It makes things difficult for markets to support,” he said.

Also speaking, Senior Reporter, West Africa Refined Products at S&P Global, Matthew Cook, said the Dangote refinery had fundamentally altered the region’s petroleum products market.

According to him, Nigeria was increasingly moving from being a price taker to a price maker in the regional petroleum market as domestic refining capacity expanded. “With the development of the Dangote refinery, that has all changed,” Cook said.

He said the refinery was now accounting for more than half of West Africa’s petrol requirements and close to 100 per cent of its jet fuel needs, describing the development as a major shift in the region’s supply structure.

Cook said S&P Global’s pricing assessments would provide greater transparency as the market evolved by enabling traders and other market participants to contribute to the formation of regional benchmarks.

“What we’re doing with these price assessments is we show the regional market. You can participate in a benchmark that is local, that’s regional, and that you can actually have a say in as a trader by submitting bids and offers to Platts,” he said.

He added that the removal of fuel subsidy in Nigeria had also fundamentally changed the country’s petroleum pricing structure, moving prices from a level that had been suppressed for years towards one more reflective of global supply and demand dynamics.

“The removal of the subsidy in Nigeria has meant that Nigerian pricing has gone from a level that’s been suppressed for many years to a level that’s now reflective of global supply and demand dynamics,” Cook said.