S&P Global Opens Abuja Office, Targets West Africa Pricing Hub

S&P Global Energy has opened an office in Abuja as the global energy intelligence firm moves to deepen its engagement with Nigeria and support the development of petroleum pricing benchmarks for the West African market.

The office was officially opened on Thursday at the World Trade Centre, Abuja, bringing together senior stakeholders from Nigeria’s oil and gas industry.

Speaking at the event, Executive Director, Strategy and Benchmarks, S&P Global Energy, Joel Hanley, said West Africa had the potential to emerge as a major petroleum pricing hub as increased local refining reshapes the region’s market.

Hanley said the Dangote refinery had significantly altered the structure of the West African petroleum market, creating an opportunity for pricing benchmarks that more accurately reflected regional supply and demand.

“West Africa has the opportunity to be a pricing hub. It’s already an energy hub. Dangote has changed everything,” he said.

According to him, petroleum products in West Africa have historically been priced against European assessments, despite differences in market conditions between the two regions.

“For many years, we’ve seen the pricing linked. People have been pricing their cargoes coming into West Africa from European assessments, European benchmarks.

“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,” he said.

Hanley said S&P Global Energy currently assesses gasoline, gas oil and jet fuel markets, as well as various grades of crude oil from Nigeria, Angola, Côte d’Ivoire, Chad and other markets.

He said the company’s pricing assessments were used in commercial contracts and investment decisions, making transparency in the methodology and processes behind the assessments important to market participants.

On the possibility of a return to fuel subsidy, Hanley said discussions at an S&P Global event in Lagos indicated opposition to such a move among some participants in the trading community.

He, however, stressed that the position reflected views expressed during the event and was not his personal position.

“During that, there was a panel discussion, and there was quite a deep-seated feeling against the return to subsidy,” Hanley said.

He added that subsidy could make it more difficult for a free market to develop and potentially affect marketers and traders seeking to establish West Africa as a major hub for petroleum trade and price assessment.

Also speaking, S&P Global Energy Senior Reporter, West Africa Refined Products, Matthew Tracy Cook, said the Dangote refinery had significantly changed the structure of the West African petroleum products market.

Cook said Nigeria was moving from being largely a price taker to playing a greater role in price formation within the regional market.

“West Africa has been highly dependent on international benchmarks and international supply for its fuel needs, its gasoline, diesel, jet fuel. But with the development of the Dangote refinery, that has all changed,” he said.

According to him, supplies from Nigeria now account for more than half of West Africa’s gasoline requirements and close to all of its jet fuel needs.

Cook said S&P Global Energy’s regional pricing assessments, including its FOB West Africa and FOB Dangote benchmarks, were designed to reflect changing supply channels in the region.

He said the company’s pricing data and analysis would provide greater transparency on supply, demand and trading flows in West Africa, while allowing market participants to contribute to price formation through bids and offers.

On Nigeria’s removal of petrol subsidy, Cook said the policy had shifted domestic petroleum pricing from a level that had been suppressed for years towards prices reflecting global supply and demand dynamics.

“Without commenting on whether or not that’s a good thing, what that does allow is for regional benchmark pricing that’s set truly by supply and demand,” he said.

Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, said the establishment of S&P Global Energy’s Abuja office was strategic to Nigeria’s energy sector and pledged continued cooperation between the company and the country.

Lokpobiri said Nigeria would not be left behind in the evolving global energy landscape and expressed the government’s readiness to strengthen its relationship with S&P Global.

“This is very important work, and I want to say that Nigeria will not be left behind. In every ramification, we will make sure that we play our role in the global energy landscape,” he said.

He welcomed the company’s decision to establish an office in Abuja, saying Nigeria was pleased to have S&P Global deepen its engagement with the country.

The Chief Executive Officer of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Farouk Ahmed, said the Abuja office would give S&P Global a closer base from which to engage with Nigeria and the wider West African market.

Ahmed said the presence of the company in Nigeria would enable it to gain a deeper understanding of regional market dynamics and contribute to the development of a reference base for the African and West African energy markets.

“We want to have a reference base for within the African and West African space. And this, to me, is a beginning, because we now have an office,” he said.

Ahmed said Nigeria had the capacity to supply petroleum products to other West African countries, adding that the country could become an anchor of the region’s energy economy.

“The ultimate goal is to enter Nigeria with our current refining capacity. Can we look at Nigeria actually supplying the rest of West Africa? We have the volumes. We have the tanks. We can turn Nigeria into the anchor of West Africa, and we can turn West Africa into a true regional economy,” he said.

Senior Director, EMEA, S&P Global Energy, Craig Powers, said the company remained committed to providing transparent price assessments and maintaining the integrity of benchmarks used by market participants.

As part of the event, Powers presented a copy of the 1971 edition of the Platts Oilgram report, published on the day Nigeria joined the Organisation of the Petroleum Exporting Countries (OPEC), as a token of appreciation.

The event was attended by senior figures from Nigeria’s oil and gas industry.