PETROAN pushes direct refinery deals as Nigeria seeks to cut fuel

The Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) is pushing for direct commercial agreements between Nigerian retailers and indigenous refineries as the country seeks to build a more competitive domestic fuel market and reduce its exposure to imported petroleum products.

The association’s latest move followed a strategic visit by its National President, Billy Sotubo Gillis-Harry, and other executives to Azikel Refinery in Obunagha, Yenagoa, Bayelsa State, where both sides discussed a structured offtake arrangement for locally refined products.

Under the proposed arrangement, PETROAN members would purchase petroleum products directly from the refinery on agreed commercial, technical and operational terms.

The model could reduce the number of intermediaries between refiners and filling stations, potentially lowering logistics costs, improving supply predictability and reducing some of the risks associated with international product markets and foreign exchange movements.

For Nigerian consumers, the significance lies in whether these efficiencies ultimately translate into more reliable supplies and more competitive petrol, diesel and other petroleum products.

PETROAN said its engagement with Azikel formed part of a broader strategy to build relationships with indigenous refiners and create multiple sources of domestic supply rather than allowing the downstream market to become dependent on a single major producer.

Gillis-Harry said the growth of local refining represented a pathway out of Nigeria’s longstanding dependence on imported refined products, but stressed that the transition required commercially viable partnerships between refiners and marketers.

“As retailers, we want to build practical partnerships with indigenous refineries that can improve product availability, strengthen supply chains and create greater certainty for businesses and consumers,” he said.

The proposed partnership comes as Azikel Refinery moves towards commercial operations. The refinery has been re-engineered from an original 12,000 barrels-per-day design to a 25,000 barrels-per-day full-slate hydro-skimming facility capable of producing Premium Motor Spirit, automotive gas oil, kerosene, aviation turbine fuel and liquefied petroleum gas.

According to PETROAN, the project has entered an advanced stage of construction and integration following the arrival and installation of its 200-tonne Crude Distillation Unit.

The emergence of additional domestic refining capacity could have wider economic implications. More local suppliers would increase competition, strengthen the resilience of the downstream market and reduce the extent to which domestic fuel availability depends on overseas refineries, shipping costs and global supply disruptions.

It could also create opportunities across the wider petroleum value chain, including transportation, storage, equipment maintenance, engineering services and retail distribution.

President and Chief Executive Officer of Azikel Group, Eruani Azibapu Godbless, welcomed the proposed partnership and said collaboration with petroleum retailers would be critical to ensuring efficient distribution and market access once the refinery begins commercial operations.

Both parties agreed to continue discussions on the commercial and technical requirements for the offtake arrangement.

For Nigeria, the larger economic opportunity is the emergence of a diversified refining base in which several domestic producers compete for market share while organised retailers secure more predictable supplies.

If that model takes hold, the benefits could extend beyond the refinery gate, helping to reduce supply-chain costs, strengthen energy security and make the domestic petroleum market less vulnerable to shocks originating outside Nigeria.