Operators express concern over stunted growth of downstream sector of Petroleum industry

The downstream sector of the oil and gas again came under the search light of operators who lamented the lack of optimisation in the value chains in the sector.

Operators who participated at the just concluded 10th Oil Trading and Logistics (OTL) conference held in Lagos were all unanimous in their summation that for the industry to achieve full optimisation in its value chain efficiency is key.

Sam Amanga one of the speakers at the event said efficiency is very important because if one of the value chains is broken, there is no way efficiency can operate and therefore optimisation can’t be achieved.

He said: “Rather when we are talking of optimising the value chains it means that there should be regular product availability in the country and the quality and standard should not be compromised.

He further opined that there should be profitability for inOperators vestment for the industry to grow.
On her part, Winny Agbana, managing director of NorthWest Petroleum identified two major issues affecting the industry as lack of total deregulations and foreign exchange.
Agbana said if the issue of foreign exchange is not sorted out, it would deny the industry the full benefits of whatever level of deregulations that has been achieved so far.
According to her, “Since we have started deregulation and libralisation, we should complete the jobs and go to the next step. What has been done so far is very courageous of the present administration, but there are still some gaps and if they are not encouraged to complete what they have started, I think we would be back to where we started from”.

The jobs are not completed. We would enter into almost as serious problem as we started because since there is a price band and marketers are in no way near half way to the upper limit of the price of petrol. This could be frustrated because foreign exchange issue and we would not have the full benefits of partial deregulations.

She further observed that though it sounds sad that there has not been any refinery in the country in the last 30 years, the truth is anybody in business is in it to make money or profit, and once they see an opportunity to make money she does not think anybody would over look it.

“Right now the opportunity is not there. As long as there is still price control no business man would want to build refinery when you are not sure what your return is going to be. If you look at the areas where there is proper deregulation, in the value chain you will see that we don’t like investments.

There are is no lack of investments in storages, jetties, retail outlets because at least you see that you can get returns on your investments. If we have deregulations today we would be struggling to control the number of refineries that we would have. This is the truth of the matter. It is not that we don’t want to invest, but if you are investing what are you investing in, yes we have large population and because of this we should expect that we have higher capacity now but we can’t because of price control”, she said.
Ian Brown of Vitol described the situation the downstream sector of the petroleum industry is going through as the one faced with uncertainty of flows, adding that the best way to optimise investment is efficient operations of the system. “If you take a cargo once in three months you can get efficiency”.