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For decades, West Africa’s petroleum market has operated around an uncomfortable contradiction.
The region has some of Africa’s largest hydrocarbon resources, millions of barrels of refining potential and a vast, constantly growing market for petrol, diesel and other petroleum products. Yet, when it comes to determining the value of the fuel it consumes, much of the region has remained a price taker.
That contradiction came into focus in Abuja last week as regulators, refiners, traders, financiers, policymakers and market experts gathered for the second West African Refined Fuel Market Conference.
Participants argued that West Africa has reached a point where producing more fuel is no longer enough. The region must now build the market infrastructure, financial systems, regulatory architecture and pricing mechanisms capable of giving its growing refining capacity real economic meaning.
At the core of the debate was an ambitious proposition that West Africa should develop a credible regional price benchmark for refined petroleum products, deepen cross-border trading, connect its fragmented infrastructure and ultimately create an integrated energy market capable of competing on a global scale.
Refining capacity/ energy security
Nigeria’s emergence as a major refining centre, particularly with the 650,000 barrels per-day Dangote refinery, is changing the balance of the regional petroleum market. But speakers at the conference repeatedly warned that refining capacity on its own cannot deliver energy security or transform the region’s economy.
The real challenge begins after the refinery gate.
Olu Verheijen, Special Adviser to President Bola Tinubu on Energy, who represented the President at the conference, maintained that West Africa is no longer simply confronted with a shortage of resources or refining capacity. The bigger challenge, she argued, is whether the region can build the infrastructure, financing systems, regulatory institutions and transparent markets required to move energy efficiently from where it is produced to where it is needed.
“Refining capacity alone does not create energy security,” Verheijen said.
Her intervention captured perhaps the central message of the conference: the region’s refining boom could become either a catalyst for economic integration or another example of Africa possessing resources without building the systems required to extract their full value.
Nigeria is already positioning itself as the anchor of that transformation.
The Federal Government believes the country’s growing refining capacity can supply not only the domestic market but neighbouring countries across West Africa and beyond. Verheijen said Nigeria now refines the majority of the petrol consumed domestically, with imports falling significantly and Nigerian refined products increasingly reaching markets outside the country.
But that ambition immediately raises another question, how does Nigeria move millions of litres of refined products efficiently across borders?
According to Verheijen and other participants, the answer lies in infrastructure.
Pipelines, ports, coastal vessels, storage terminals, trucking networks and trading platforms will have to be developed or upgraded. Without them, the region could end up with increasing refining capacity but insufficient capacity to move products to consumers.
That is why infrastructure financing emerged as one of the conference’s most important themes.
Yet infrastructure, by itself, will not create a functioning regional market. For that to happen, the countries of West Africa will also have to rethink the way they regulate, finance and trade petroleum products.
Between national, regional transaction
Suleiman Yahyah, Chairman of RHG Advisory, pushed the argument even further, calling for West Africa to move away from viewing its petroleum industry as a collection of separate national markets.
Instead, he advocated a systems-based regional energy market in which countries retain their national regulatory authority but increasingly allow transactions to take place across borders.
His formulation was captured thus “We regulate nationally and transact regionally.”
For Yahyah, this would require countries to harmonise regulatory frameworks so that an operator licensed in one West African country could operate and trade in another without confronting fundamentally different rules.
It would also require common product specifications, shared data standards, modern energy contracts, interconnected infrastructure and a regional dispute-resolution mechanism.
If these pieces are assembled, Yahyah believes West Africa could potentially build a cumulative $3 trillion energy market by 2035.
But for him, the foundation of such a market goes beyond physical infrastructure.
“Markets do not run on infrastructure alone. They run on liquidity,” he argued.
That is where Yahyah’s proposal becomes particularly significant.
He called for the establishment of a regional settlement facility of about $3 billion, potentially anchored in naira and supported by Central Banks, the African Finance Corporation, the African Development Bank, sovereign wealth funds and the African Energy Bank.
The proposed facility, he said, could provide a financial mechanism capable of supporting cross-border energy transactions and reducing one of the biggest constraints to regional trade: the difficulty of settling transactions across multiple currencies and financial systems.
Rather than creating an entirely new system, Yahyah suggested that the facility could build on the existing Pan-African Payment and Settlement System.
His warning was, however blunt, without liquidity, there can be no efficient West African energy market.
But even if the infrastructure is built and the money is available, another fundamental problem remains what price should buyers and sellers use?
Need for West Africa price reference
For several years, African petroleum markets have relied heavily on international benchmarks and price assessments developed outside the continent.
Participants at the conference argued that this arrangement is becoming increasingly difficult to justify as Africa develops more refining capacity and begins to generate larger volumes of its own refined products.
NMDPRA Chief Executive, Mr Rabiu Abdullahi Umar, has been particularly vocal on the issue.
Umar, maintained that, the more West Africa refines, the stronger the case for developing a price reference that reflects the region’s own supply, demand, logistics and market realities rather than relying excessively on external pricing signals.
He explained that the issue is not simply about pride or symbolism. According to him, price discovery affects virtually every part of the petroleum value chain, from refinery investment and trading contracts to financing, risk management and ultimately the price paid by consumers.
“If West Africa becomes a significant producer and trader of refined products but continues to depend overwhelmingly on price signals generated elsewhere, the region could find itself in the curious position of producing more fuel without gaining a corresponding influence over its value.
That is why the push for a regional benchmark has gathered momentum. But establishing one presents its own challenges.
A benchmark cannot become credible merely because regulators or governments announce it. It must emerge from a market with sufficient liquidity, reliable transaction data, active participation and confidence in the methodology used to determine the price.”
Credible price built on transparency
Head of Platts, S&P Global Energy, Vera Blei, similarly argued for credible regional price assessments, stressing the importance of transparent and clearly defined methodologies in building trust among refiners, traders, regulators, investors and consumers.
She added that this distinction is important because West Africa does not merely need a Nigerian benchmark with a regional label, it needs a market-generated reference price that traders, refiners, financiers and regulators across the region consider credible enough to use in commercial transactions.
This, she said, will require transparency and
also require market participants to provide accurate transaction data, something that has historically been difficult in fragmented African commodity markets.
A reason Verheijen cautioned that a credible regional benchmark cannot simply be declared into existence. It has to be built on actual transactions, reliable data, sufficient market liquidity and confidence in the institutions supporting it.
The conference therefore exposed an important paradox.
West Africa wants greater pricing independence, but achieving that independence will require cooperation with the very global institutions whose benchmarks it seeks to reduce its dependence on.
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Yahyah’s approach is pragmatic rather than ideological.
He counselled that Africa should not attempt to reinvent sophisticated market methodologies, trading technology and price-reporting infrastructure that already exist. Instead, the region should partner with institutions such as S&P Global, Argus and Bloomberg while ensuring that those relationships are structured around local participation and African market development.
That may prove to be one of the most realistic paths forward.
The ambition is not to isolate West Africa from global markets. It is to ensure that the region participates in those markets from a position of greater strength.
Beyond pricing
The pricing debate ultimately leads back to a more fundamental question: can West Africa physically move the products it produces from one market to another efficiently and competitively?
This is where Nigeria’s refining renaissance could become either a regional game changer or a missed opportunity.
The country’s refining capacity has created the possibility of a fundamental shift in its role in the petroleum value chain from a major crude oil exporter and refined-product importer to a producer, supplier and potentially a regional trading hub.
But Nigeria cannot achieve that transformation alone.
Its refining capacity could supply neighbouring markets, but regulatory differences could slow transactions. Products could be available, but inadequate storage and transportation could raise their delivered cost. Buyers could be willing, but foreign exchange and settlement challenges could undermine transactions. And even when products change hands, the absence of a trusted regional benchmark could complicate pricing.
That is why participants repeatedly returned to the need for a connected regional infrastructure network.
Yahyah offered a glimpse of what such a regional architecture could look like, suggesting Senegal could serve as a western gateway, Abidjan as a commercial and logistics hub, Ghana as a balancing and storage centre, while Lagos could emerge as an Atlantic hub for liquidity and refinancing.
“Whether that precise configuration ultimately materialises is less important than the underlying principle.
West Africa must stop thinking about petroleum infrastructure solely within national boundaries.
A refinery in one country can only become a regional asset when roads, ports, pipelines, storage terminals, shipping routes, financing mechanisms and regulatory systems connect it to customers in other countries.
That is the difference between refining capacity and a regional market,”.
Regulatory harmonisation
From coordination to implementation
Regulatory harmonisation emerged as another recurring theme at the conference.
The West Africa Regulators Forum, which emerged from the first edition of the conference, is intended to provide a platform for regional regulators to coordinate approaches, improve cross-border trade and address regulatory fragmentation.
The challenge now is moving from coordination to implementation.
Different countries have different tax systems, product specifications, licensing regimes, foreign exchange arrangements and approaches to petroleum pricing. Unless these differences are progressively addressed, West Africa’s ambition of becoming an integrated refined-product market could remain trapped in conference rooms.
For the region to operate as a genuine market, regulators will have to make cross-border transactions easier without compromising national oversight.
That means building confidence among governments, regulators, traders and investors that the rules governing transactions are predictable, transparent and enforceable.
It also means recognising that national energy security and regional market integration do not necessarily have to be competing objectives.
A country can retain control over its energy policy while still allowing its petroleum market to connect more effectively with those of its neighbours.
The question is whether governments are prepared to make the institutional adjustments required to achieve that balance.
The consumer remains the ultimate test
There is, however, another dimension to the debate that should not be lost amid the excitement over billions of dollars in potential trade.
The ultimate test of the proposed regional market is the consumer.
Yahyah argued that the success of regional energy integration should not be measured simply by the value of transactions or the number of infrastructure projects completed.
It should be measured by whether ordinary people gain better access to affordable and reliable energy; whether industries become more competitive; whether agriculture can make greater productive use of energy; whether clean cooking expands; and whether jobs and wealth are created.
This point goes to the heart of the regional pricing debate.
A West African fuel benchmark that merely changes the currency or location of price discovery without lowering transaction costs will have limited value.
Likewise, a regional trading hub that generates billions of dollars in transactions but leaves households and manufacturers facing expensive and unreliable energy would represent only partial success.
If successful, a properly integrated refined-fuel market could reduce duplication, improve supply security, make cross-border arbitrage more transparent, attract infrastructure capital and allow West African refiners to compete more effectively with suppliers outside the region.
It could also retain more value within Africa.
Instead of exporting crude, importing refined products and accepting externally determined prices, West Africa could increasingly produce, trade, finance, price and distribute its own petroleum products.
That would represent a profound change in the region’s petroleum economy.
But the conference also offered a warning.
The hardest part of this transition will not be agreeing on the vision. It will be executing it.
The first conference produced tangible outcomes, including the emergence of the West Africa Regulators Forum, the establishment of an S&P Global Commodity Insights office in Abuja and the introduction of naira-denominated assessments for refined products produced in West Africa.
The second conference therefore comes at an important juncture.
As Verheijen noted, the next phase must move from isolated transactions to deeper market liquidity, from individual infrastructure projects to connected regional corridors and from periodic regulatory cooperation to sustained institutional coordination.
That may ultimately be the real significance of the Abuja gathering.
The conversation is no longer about whether West Africa should build a refined petroleum market.
The question is whether its governments, regulators, refiners, traders, financiers and consumers can move quickly enough to build one before the opportunity created by the region’s refining expansion is lost.
Nigeria has supplied the catalyst through its refining resurgence.
But a refinery does not create a market.
A market is created when infrastructure connects supply to demand, when finance connects buyers to sellers, when regulation connects national economies, and when transparent price discovery connects transactions to value.
