L-R: MEMAN CEO, Clement Isong and Chairman, MEMAN, Huub Stokman
Energy experts from S&P Global and the Major Energy Marketers Association of Nigeria (MEMAN) have warned that Nigeria must urgently strengthen its energy security framework through the development of strategic petroleum reserves, supply diversification, and sustained investment in refining and infrastructure.
The warning comes amid rising concerns over global oil market volatility, driven by escalating geopolitical tensions involving the United States, Israel, and Iran, with potential disruptions to crude oil supply—particularly around critical routes such as the Strait of Hormuz.
The experts spoke during a virtual webinar organised by MEMAN in partnership with S&P Global, themed “West African Market Resilience in the Face of Geopolitical Situation,” which examined the implications of global tensions on West Africa’s downstream petroleum sector.
Chairman of MEMAN, Huub Stokman, said current developments in the global energy market could significantly shape the future of energy systems across West Africa.
“Actions taken now will shape West Africa’s energy trajectory for years to come,” Stokman noted, highlighting the urgency of strengthening supply systems and regulatory frameworks.
He added that Nigeria, as Africa’s largest oil producer, holds strategic advantages, including high-quality crude, expanding refining capacity—particularly the Dangote Refinery—and a large domestic market. However, he stressed that these advantages must be supported by improvements in pipeline security, production consistency, regulatory transparency, and infrastructure development.
Stokman also pointed to increasing price volatility in the domestic market, noting that fuel prices in Nigeria largely follow international import parity trends.
“Frequent or arbitrary price adjustments are not aligned with global best practices. Stable and predictable pricing mechanisms are critical for market confidence,” he said.
Stokman added that Nigeria currently maintains over 30 days of petrol supply coverage, supported by the role of the national oil company as supplier of last resort.
Energy expert Joe Nwakwue described Nigeria’s transition to a deregulated downstream market as a period of structural adjustment, marked by price volatility but also opportunities for efficiency and competition.
Providing global market insights, Gary Clark, Associate Director for EMEA Clean Refined Products at S&P Global, emphasized that strategic petroleum reserves are essential tools for managing supply disruptions and stabilising markets.
“Strategic reserves must act as a buffer to protect markets in times of disruption,” Clark said.
He explained that beyond storage, such reserves play a broader role in energy policy, enabling governments to respond to shocks while supporting supply diversification and reducing dependence on single crude sources or regions.
Clark noted that while Nigeria’s growing domestic refining capacity offers some level of protection, the country’s oil market remains closely linked to global supply and pricing dynamics. He also questioned whether pricing advantages available to domestic refineries would translate into broader consumer benefits.
Also speaking, Stanislas Drochon, Africa Head of Fuels and Refining at S&P Global, said energy security in Sub-Saharan Africa must be anchored on reliability, affordability, and accessibility.
He raised concerns over Nigeria’s limited strategic petroleum stock levels, noting that the country does not meet the internationally recommended 90-day reserve benchmark.
“Nigeria must build adequate strategic stocks if it is to withstand global supply shocks,” Drochon said.
He warned that any escalation in Middle East tensions—particularly around key oil transit chokepoints—could trigger major supply disruptions for African countries heavily dependent on imports.
Drochon further cautioned that increasing supply costs could translate into higher domestic fuel prices, with potential economic and social implications, including pressure on governments to reintroduce fuel subsidies.
He also highlighted risks of: fuel smuggling, inflow of substandard or discounted products and market distortions in a volatile pricing environment
Despite these risks, he noted that Nigeria has an opportunity to position itself as a regional energy hub, leveraging its refining capacity, LNG exports, and strategic location for bunkering services.
It was a consensus by speakers at the session, who agreed that strengthening Nigeria’s energy supply chain infrastructure is critical to long-term resilience.
According to the experts, some actions that would ensure long term resilience include:
- Expanding refining capacity
- Developing storage infrastructure
- Strengthening ports and import terminals
- Improving transportation and distribution networks
Without these measures, they warned, prolonged global uncertainty could significantly impact supply stability, pricing, and economic resilience across the region
“A broader and more flexible supply chain will enhance resilience and ensure reliable energy supply during periods of global volatility,” Drochon said.
The webinar concluded that while Nigeria is relatively better positioned than many regional peers, its energy market remains highly exposed to global oil market dynamics.
