The federal government should treat S&P Global’s assessment of Nigeria’s potential to become a petroleum pricing hub as a call to build the institutions, infrastructure and policy certainty required to convert rising refining capacity into durable market influence.
We believe the significance of S&P Global Energy’s observation goes beyond the emergence of the Dangote refinery. It points to a possible structural shift in the West African petroleum market, where Nigeria could move from being primarily a consumer and price taker to becoming an important centre for price formation and regional trade.
Joel Hanley, Executive Director, Strategy and Benchmarks at S&P Global Energy, said West Africa already functions as an energy hub but has an opportunity to develop benchmarks that better reflect local market conditions. He specifically identified Lekki, Lagos and Lomé as markets that could support stronger regional price assessments.
We think this proposition deserves serious policy attention because pricing power can have implications well beyond the petroleum sector. A credible regional benchmark could strengthen price discovery, improve commercial contracting and provide traders, investors, refiners and financial institutions with a reference point grounded in West African supply and demand.
But Nigeria should not mistake production capacity for pricing power. We are positioning the discussion around a more fundamental issue: whether the country can create the market conditions that allow transparent and credible price formation to take place.
A pricing hub requires more than a large refinery. It requires sufficient trading liquidity, transparent transactions, reliable market data, adequate storage, efficient ports, predictable regulation and confidence in the integrity of the price-setting process. Without these foundations, increased product volumes may strengthen Nigeria’s supply position without necessarily giving it lasting influence over regional pricing.
The federal government should therefore focus on the market infrastructure behind the opportunity. We believe regulatory agencies and industry stakeholders should prioritise transparent petroleum product trading, improved data availability, efficient product evacuation and storage, and smoother cross-border transactions across West Africa.
The comments on subsidy also require a measured reading. Matthew Tracy Cook of S&P Global Energy said participants at the company’s Lagos event had expressed opposition to a return to subsidy, while making clear that the observation represented the views of market participants and not his personal position. His wider argument was that market-based pricing allows regional benchmarks to reflect actual supply and demand.
We are of the view that this distinction is important. The subsidy debate should not be reduced to a choice between government intervention and complete market freedom. The more important question is whether interventions preserve transparent price discovery while protecting households and businesses from excessive adjustment costs. Targeted social protection may therefore be more compatible with a developing market architecture than policies that obscure the underlying price of petroleum products.
We also think S&P Global’s decision to establish an Abuja office creates an opportunity for deeper engagement with Nigeria and the wider regional market. Its presence could support better understanding of local transactions, product flows and market conditions. However, credible benchmarks ultimately depend on the quality and transparency of the market they measure.
The NMDPRA’s ambition of making Nigeria the anchor of West Africa’s petroleum economy therefore needs to move from aspiration to execution. That means strengthening storage and logistics, improving port efficiency, supporting regional trade and maintaining regulatory consistency.
We are positioning the S&P Global assessment as an opportunity for the government to think beyond refining capacity. Nigeria’s larger prize may lie in becoming not only a major supplier of petroleum products, but also a reference point for how those products are traded and priced across West Africa.
S&P Global has identified the possibility. We believe the government’s next responsibility is to build the market capable of sustaining it.
