NIGERIA: OIL & Gas Downstream Sector ( Refining & Marketing ) Report 2009

There are significant investment opportunities in Nigeria's down-stream sector of the Oil & Gas Industry. The focus of Government is the deregulation of the sector through the licensing of private refineries and the removal of Government subsidies to the downstream sector, and the privatization of existing ones. It is hoped that domestic capacity, through such strategic action would at least meet demand. The 4 existing refineries have significantly and consistently produced below capacity, caused by a host of factors, least of which is poorly managed Turn-Around Maintenance routine.

The report takes a close look at the structure of the downstream sector, the developments both locally and in the global refining and petrochemical industries. It also highlights investment opportunities in refining and marketing and petrochemicals.

Local Oil Refining Marketing companies are positioning to play effectively in the deregulated operating environment. In this report, the financial performance of major marketers of petroleum products is also analyzed. The deregulation of the Downstream Oil & Gas sector (Petroleum Refining & Marketing) has been in focus for quite some years now: scarcity of petroleum products and the gradual deregulation of petroleum product prices have generated much heated controversies.

The Government is determined to nurture private sector participation hence its licensing of private refineries and deregulation of petroleum product prices, in order to improve local capacity. In the next 3-5 years, consolidation is expected in the Oil Refining & Marketing sector, with new entrants; hence, there are significant investment opportunities that are looking for funding, both local and international.

This report offers a concise overview of the developments in Nigeria's downstream sector and the emerging investment opportunities. No doubt, the Government is vigorously pursuing the deregulation of the downstream sub-sector sector of Nigeria's Oil & Gas; it has been reported that NNPC, the State's Oil & Gas Giant has directed existing oil E&P companies to refine 50% of their production locally. NNPC itself is undergoing structural transformation to enable it position as integrated Oil & Gas Company that is accountable and transparent. Opportunities exist for a wide range of upstream and downstream activities, including exploration, production, pipelines and storage, and for a large range of service companies, including equipment suppliers, providers of petroleum and environmental technical services, consultants, pipeline and storage contractors, banks and others wanting to finance major new developments. The Government's local content policy seeks more integrated, local companies in Nigeria's Oil & Gas sector.

The development of the natural gas industry will create still more large scale projects, including gas processing, pipelines and local distribution. Several gas-fired power stations have been planned. Nigeria could also emerge as a significant regional producer and exporter of LPG.