The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has said it is exploring pathways for establishing a credible African reference price benchmark that reflects regional market realities and supports transparent pricing mechanisms.
Chief Executive of the NMDPRA, Rabiu Umar, disclosed this at a press briefing in Abuja on Thursday.
Umar explained that while Africa produces significant volumes of oil and gas, much of the pricing for its commodities is determined outside the continent.
“Whether you’re talking about Europe, Northwest Europe, or America, they have their own benchmarks. Whether you talk about the Mediterranean or you go to the Gulf countries, everywhere you go, there’s a trading index. It is a global index, but there is a specific index for that region.”
He stressed that these benchmarks and indices exist because the pricing process begins with price discovery, which takes many factors into consideration.
“For example, demand and supply, what is the logistics cost to bring the product into that region? All that goes into defining the reference price,” he added.
He expressed optimism that the regulator would leverage every available forum to facilitate the exchange of knowledge and insights on current market dynamics, evolving trends, and emerging opportunities within the African energy sector.
Umar explained that Europe has successfully developed the Amsterdam-Rotterdam-Antwerp trading hub, which serves as the principal pricing and supply centre for much of the continent.
He urged West African countries to pursue a similar model to strengthen regional trade and improve price discovery.
Earlier, lawyers had urged the NMDPRA’s current leadership to pursue amendments to the Petroleum Industry Act (PIA) and address issues relating to regulatory overlap and stakeholder engagement.
