Falling petrol prices seen threatening oil and gas stocks

The escalating competition between Dangote Refinery and PMS importers is posing a significant risk to the future performance of oil and gas stocks in Nigeria.

As of March 12, the NGX Oil and Gas Index has recorded a 7% decline, driven by a broad downturn among its constituent stocks. In essence, the downstream stocks, except Eterna Plc are all bearish, as falling petrol prices continue to dampen revenue growth prospects for 2025.

MRS Oil Nigeria, a key partner of Dangote Refinery, has dropped 18.3 percent year-to-date, while Conoil Plc is down 14.5 percent from its all-time high of N387.20. Nigeria’s largest PMS retailer, TotalEnergies Marketing, has shed 8.74 percent this year despite strong financials in 2024.

A deeper look at the decline

While some analysts attribute this downturn to profit-taking, a closer look at stock price movements suggests a more pressing factor—Dangote Refinery’s price cuts.

For example, MRS Oil Nigeria began 2025 at a record N217.8 per share after a stellar 105 percent return in 2024. The stock slumped 25 percent in January to N162.90, rebounded 14 percent in February to close at N185, but tumbled again to N166.50 on March 6 following Dangote’s price cut announcement. It has since recovered to N178.

TotalEnergies has also struggled to sustain investor confidence, losing 8.74 percent in 2025 despite posting N1.04 trillion in revenue last year.

Eterna Plc has defied market trends, surging 56.4 percent year-to-date after gaining 99 percent in 2024. The stock hit a year-high of N48.70 on February 12 and currently trades at N38, showing resilience against falling petrol prices.

The 2024 boom and 2025 reality

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In 2024, petrol prices soared from N670 per litre in January to N1,250 in November, boosting revenues for downstream players. Dangote Refinery’s market entry and the strengthening naira, however, triggered a reversal in December, with prices dropping to N899.50 by year-end.

Altogether, the surge in petrol prices in 2024 led to a surge in revenue for downstream oil companies, as TotalEnergies posted a N1.04 trillion revenue as well as a 115 percent growth in its net profit to N27.8 billion.

MRS Oil posted a 71 percent growth in its revenue, as it recorded a N312.2 billion in 2024. The company’s net profit grew by 61 percent to N6.5 billion, from N4 billion in 2023. Eterna Plc’s revenue grew by 71 percent to a record N313.6 billion. The group also turned around its N9 billion net loss in 2023 to a N3.2 billion net profit for 2024. Conoil also recorded a 60.5 percent growth in its revenue, which hit N323.1 billion. Its net profit grew by 15 percent to N11.4 billion from N9.9 billion in 2023

However, in 2025, with petrol prices going down, these companies have been cautious with their earnings forecast. For example, TotalEnergies projects a 23 percent year-on-year drop in its H1 2025 revenue. The company forecasts a revenue of N405.5 billion, a significant outcry from its N529.9 billion revenue generated in H1 2024.

Eterna Plc is also projecting a 10 percent year-on-year decline in its first-half revenue. The group is projecting a revenue of N132.5 billion, a decline from the N147.5 billion recorded in H1 2024.

Although MRS projected a 63 percent year-on-year appreciation in its first quarter revenue. Achieving this remains uncertain with petrol now at N860 per litre.

Industry concerns

While some analysts argue that increased sales volumes could cushion revenue declines, petrol retailers have signaled financial strain. The Petroleum Retail Owners Association of Nigeria (PETROAN) has voiced frustration over falling prices, warning of potential layoffs and economic instability.

“Price fluctuations are disrupting the sector’s business growth and will inevitably lead to job losses,” said PETROAN spokesperson Joseph Obele.

As the market adjusts to a new pricing reality, oil and gas stocks face a defining moment—one that could reshape the industry’s profitability in 2025 and beyond.