Nigeria, West African regulators forge unified energy market to escape global price shocks

….insist on local reference pricing to shield Africa from overseas shock

Nigeria and regulatory authorities across West Africa are pushing to establish an integrated regional market for crude and refined petroleum in a major effort to strengthen energy security and curb reliance on foreign pricing benchmarks.

Spearheaded by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and the West Africa Regulator Forum (WARF), the collaborative initiative aims to harmonise regulatory frameworks, develop shared energy infrastructure—including cross-border pipelines, storage hubs, and processing facilities—and build a localised trading system that reflects regional supply realities.

Rabiu Umar, Authority Chief Executive of the NMDPRA, stated during the WARF conference in Abuja on Tuesday that while Africa possesses resources, demand, and expanding refining capacity, there is a distinct need for infrastructure that efficiently connects all three.

The continent requires regional integration to optimise existing assets, reduce unnecessary duplication, and direct scarce capital towards infrastructure with the greatest regional economic impact.

He emphasised that a more efficient West African market must allow strategically located refining, storage, port, and distribution infrastructure to serve multiple markets through predictable cross-border arrangements.

“A regional trading hub cannot function if products cannot move reliably from refinery to storage, from storage to terminal, from terminal to vessel, or across borders to demand centres,” Umar said. “Our infrastructure conversation must therefore encompass the entire chain: refineries, pipelines, storage terminals, jetties, ports, rail networks, road corridors, marine logistics, strategic reserves, and digital trading platforms.”

The objective, he added, is not infrastructure for its own sake, but infrastructure that reduces the cost of moving energy, increases security of supply, improves inventory visibility, expands the number of credible market participants, and creates the physical liquidity upon which transparent pricing depends.

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“This is also why we must think regionally. Not every country needs to replicate every asset,” he noted.

Moving beyond 2026, regulators must focus on expanding reliable regional refining capacity, facilitating greater movement of products between surplus and deficit markets, and converting infrastructure gaps into investable projects with appropriate commercial structures, transparent tariffs, credible demand, and risk-sharing mechanisms capable of attracting capital.

Umar also stressed the need to accelerate regulatory and product-standard harmonisation, stating that regulators must use regional regulatory cooperation to reduce unnecessary barriers and improve the predictability of cross-border trade.

“We need sufficient compatibility to allow trade to occur safely, transparently, and efficiently. And this is the difference, really, between regulatory uniformity and regulatory configuration,” he said.

“If we look at the refining capacity on the continent and how it has been created, it simply does not make sense that if there is a problem in Western Europe or in the Mediterranean, it is going to affect our pricing in Africa. There may be issues which have absolutely nothing to do with what is going on here, and prices are determined based on geopolitical issues, demand and supply, and complexities within the market.”

He concluded that this presents a great opportunity for Africa, and West Africa in particular, to have something specific to its own context, shielding the region to an extent from external market shocks.

Oritsemeyiwa Eyesan, Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), noted in her remarks that the Nigerian upstream, midstream, and downstream industry is currently experiencing tremendous changes, including a spike in refining capacity and crude production.

“We are seeing Nigeria not only meet its refining needs, but attempt to also export; that is unprecedented. We have also seen the gas industry move from total deficit to at least meeting and bridging the gap. That also is unprecedented,” Eyesan said. “For the upstream, we have also seen an increase in our crude oil production. We are now able to cross the barrier that OPEC has set for us.”

She emphasised that to achieve a sustainable regional pricing system, West African crude markets must be integrated and cease operating in silos.

“We will be discussing, we will be aligning on the West African pricing system. To make this happen, there are some high-level issues we must all agree on. The West African market must be integrated. It is no longer individualistic,” she stated.

Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, called for increased investment in the oil and gas industry, particularly in the midstream and downstream subsectors, warning that current refining capacity remains insufficient to meet market demand.

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Lokpobiri noted that the Dangote Refinery’s current capacity of 650,000 barrels per day of crude oil is not enough, calling for further investment to expand refining capacity nationwide. He maintained that oil and gas would continue to be the dominant energy resource for a long time to come, stressing that Nigeria needs these resources to industrialise.