Nigeria, Africa’s leading crude oil producer, has partnered with S&P Global to introduce a regional fuel price benchmark that addresses the limitations of global pricing models. This collaboration aims to develop more accurate pricing indices for key petroleum products, including petrol, diesel, aviation fuel, and liquefied petroleum gas (LPG), tailored specifically to the West African market.
Currently, the region relies on global benchmarks, which often fail to reflect the unique supply chain challenges faced by West African nations. Farouk Ahmed, the head of Nigeria’s Midstream and Downstream Petroleum Regulatory Authority, pointed out that the initiative seeks to rectify this mismatch. He emphasized that “despite being a major oil and gas producer, West Africa still depends on external references for pricing, which do not consider regional complexities.”
The new partnership was unveiled at the West African Refined Fuel Conference held in Abuja. The initiative is expected to improve transparency in fuel pricing, attract investments, and enhance energy security across West Africa. Nigeria, which already accounts for 31% of the region’s refined fuel supply, expects this percentage to rise as new refining projects come online and capacity increases.
Central to Nigeria’s push to become a regional fuel trading hub is the $20 billion Dangote Petroleum Refinery in Lagos. With a refining capacity of 650,000 barrels per day (bpd), it began operations in 2024 and is set for an upgrade to 700,000 bpd by the end of 2025. As more refining capacity comes online, Nigeria aims to strengthen its role in meeting West Africa’s growing fuel demands.
While Nigeria’s focus is on increasing its domestic refining capacity, the broader ambition includes ensuring that local pricing reflects regional realities. This move is part of a larger strategy to empower African nations to take greater control over their economic narratives, especially in industries like oil and gas, where pricing has been largely dictated by external forces.
Africa’s Push for Economic Self-Determination
In a broader context, Nigeria’s initiative aligns with a growing desire among African nations to reshape their economic identities. Amid increasing scrutiny over how Africa’s economies are evaluated globally, the African Union is planning to launch a continental credit rating agency by 2026. This is a response to the perceived biases of international agencies such as Moody’s, S&P, and Fitch, which have been accused of disproportionately downgrading African nations while being slow to upgrade them when conditions improve.
The launch of Nigeria’s fuel price benchmark marks a significant step in the country’s ambitions to solidify its role in global energy markets while ensuring that African nations are not left behind in shaping their economic futures.
