‘Energy efficiency key to boosting Nigeria’s downstream sector’

HUUB STOKMAN is the managing director of Nigerian National Petroleum Company Retail Ltd and chairman of the Major Energy Marketers Association of Nigeria (MEMAN).

Stokman is a Dutch national with over 25 years of international experience in the oil and gas industry, overseeing sales and marketing businesses and various international projects.

In this interview with Dipo Oladehinde, Stokman shares his insights into the downstream sector of the Nigerian oil and gas industry and Nigeria’s voyage for carbon emissions reduction. Excerpts:

What is the vision behind the rebranding from MOMAN to MEMAN?

If you look at the MEMAN members at the moment, they’re not just investing in oil, many of them are increasing their investments in alternative energy like Compressed natural gas (CNG), Electric Vehicle and solar.

So, I think the reality is that you need to reflect on what your members are doing. Hence, the move from MOMAN to MEMAN makes a lot of sense, because all our members are changing what they’re doing and I think that’s just the future and this journey will be with us for the foreseeable future.

We believe that this transformation effectively reflects a vision for the future and underscores our commitment to sustainability and resilience of the downstream energy sector in Nigeria.

Will your members still desire to drive the retail expansion of petroleum products with this rebranding to MEMAN?

Fossil fuels are still an important part of the energy mix for years to come. Most of our members already have investments in traditional PMS, AGO, and jet fuel but we are also recording rising investments in CNG, solar and Electrical vehicles.

This rebranding development will spark more investments in energy efficiency; The size of investment will be different and the size might not be the same size that we are used to but the size will evolve together with the markets evolving. I think that’s more of it. And don’t forget, investments in solar, CNG, or LPG are not small investments.

So, they’re still big investments. But it might mean that you don’t build 1000 retail sites, you might do slightly fewer sites because, at the end of the day, each site needs to be profitable.

What are your thoughts on the Nigerian energy transition agenda and how will MEMAN play a part in shaping that narrative when you consider the fact that Nigeria needs up to a trillion dollars a year in investments over the next 60 years?

When you do any transition, it’s all about putting the right policies in place that promote energy transition and I think the government is trying to make sure we get all the right policies in place.

As MEMAN members, we will take those policies to see exactly where indeed, in our activities, we want to invest in this energy transition and it will come.

With these kinds of things, it feels very slow in the beginning, but it becomes almost like a flywheel, you will go faster and faster as people see that it’s working because from a consumer point of view, many consumers would love to have their cars converted into CNG but where are they going to fill it up.

So, it’s a bit of a chicken and egg. So, it all comes together. Once it comes together, it becomes a flywheel and will go faster and faster, then also people start to believe in it. And you’ll see more and more investments flowing. Hence, my argument is in the market, all the ingredients are there, and it is now making sure that they all come together at the same time and create that confidence. It will go faster and faster because once it’s there, people will see it.

What is your outlook for Nigeria’s downstream sector in 2024?

There is still a little bit of a transition from a regulated market to a deregulated market, I don’t know exactly when that will end. Some people say it will end when the refineries come on stream and there’s not an illogical thing to say, because that will create clarity if you know. The key thing is that people see that there is a future in the downstream if you make the right investments and if you do the right business.

The downstream business has for many years from under-investment, then it was logical and the margins were just not there to invest. After the deregulation, with refineries coming onstream, people now see a future again for the industry.

Not everybody will invest, and not everyone will grab those opportunities but those who grab these opportunities will have a good and sustainable future because it will be a combination of grabbing what’s there and those who are working towards the future. You can’t say, I’m only going to do one thing you’ll have to do both.

What major roles do you think the government can play in supporting investment in Nigeria’s downstream sector?

What any investor wants is predictability. If there’s a policy today, which indeed, for instance, allows me to import VAT-free equipment for CNG or LPG and investors know that that policy is going to be there for a bit longer, they will invest in that sector.

So, my argument always is, as long as investors believe that there’s consistency in policy, and predictability in policy, even if they say the policy might change, but we already know when it will change if this happens, then people will invest.

The government is trying to make sure that all these policies come into play and the key thing also is that there will be inflation, dispensing doesn’t happen overnight. It takes time. If people think that there’s a magic wand, and then these kinds of policies take a bit of time to land, then you will see that they start lining up the investment. Just give it a bit of time.

In the next five years, where do you see MEMAN from now?

There are three major roles that we can play as MEMAN.

The first is Health, Safety and Environment. It starts and finishes with HSE as well as adding value to our customers and stakeholders.

Secondly, is making sure that all operational excellence and efficiencies are being derived. Don’t forget, it’s great to invest in business, it’s good to do energy transition, but you still need to do it efficiently. Otherwise, you’re wasting money in a way or wasting opportunity for whatever it is.

Thirdly,All MEMAN members will invest in different arms of energy transition. Some of us might have to do CNG, some might go into LNG, some might go into biofuels while others might go into solar. It is not a one-size-fits-all but the opportunities to be active in all forms of the energy mix is that the MEMAN members play a leading role in it. But be very clear, not all of them will play the same role in each different source of energy.

Some might go very big on EVs at some stage. Because everybody has different ideas about timing. Not everybody has the same strategic outlook regarding when things will happen, which is normal.