2023 Oil and Gas Downstream Industry Report

Overview of the Report

The Nigerian Downstream Oil and Gas industry (“the Industry”) is significant to the country’s economy in line with the relevance of fossil fuels in powering transportation and various machines across multiple sectors of the economy. In addition, the country’s growing population (c.2.4% in the last 5 years), which has resulted in rising energy demand, has underpinned Industry output, leading to an annual growth rate of 5% over the last five years. However, the effects of the Russia-Ukraine war, particularly its disruptive impact on the global supply of crude oil, have led to elevated oil prices. The removal of petrol subsidies in Nigeria, which sparked a surge in pump prices to a current average of ₦568/litre from the previous ₦185/liter, is anticipated to lower demand from low and middle-income households in the short to medium term. Nonetheless, we note the discontinuation of the subsidy regime (on paper) in June 2023 to be a positive game changer for the Nigerian economy, as it is estimated to save the government at least ₦6 trillion annually as well as allow for full deregulation of the oil and gas downstream sector.

A slew of issues, including volatile oil prices, pipeline vandalism, crude oil theft, disruptions in oil supplies and non-functional refineries, have hampered the Industry’s growth potential and caused it to operate suboptimally. Nonetheless, the promise of the 650,000 barrels per day Dangote refinery in Lagos, the 200,000 barrels per day BUA refinery in Akwa Ibom, and other state-owned refineries with a combined refining capacity of 445,000 barrels per day suggests that the era of Nigeria importing refined oil may soon be over, and the Industry can begin to enjoy a more stable supply of refined oil. This is in addition to new terminal facilities and new regulations by the NMDRPA, which we believe are all set to propel the Industry forward.

The 2023 Oil and Gas Downstream report covers the following:

• The size and structure of the Industry
• The impact of the macroeconomic environment on the Industry
• An assessment of the Industry’s financial condition
• A review of the Industry’s regulatory environment
• An analysis of competitive activity in the Industry
• An overview of the key strengths and weaknesses of the Industry

We believe the information, analyses and opinions contained in this industry report will prove indispensable to:

• Bankers and financiers who wish to assess the creditworthiness of Industry players
• Analysts, investors and other users of financial information who require an in-depth understanding of the Industry
• Operators seeking to keep abreast of key developments in the Industry
• Regulators and policymakers seeking knowledge of contemporary issues in the Industry