Nigerias State Oil Company to Enter Lubes Market

State-owned Nigerian National Petroleum Corp. is entering the finished lubricant business, stating that it will commence blending and marketing finished products in the first quarter of this year.

An article in the fourth quarter issue of NNPC Magazine quoted NNPC Managing Director Adeyemu Adetunji saying the company will offer lubricants in order to increase revenue and expand its retail market share.

Haruna Abdurrahman, lubes manager at NNPC Retail Ltd., explained to Lube Report that the production of a full range of lubricant products will commence after certain requirements are met.

Based in the capital of Abuja, NNPC is a 41-year-old integrated oil company, engaged in exploration and production of petroleum, refining, distribution and petrochemicals. For numerous years it intermittently produced base stocks at one of its four refineries - in Kaduna - but the base oil plant has been dormant for several years now. The company has not previously sold finished lubricants, but Adetunji said NNPC Retail has considered doing so for a few years and recently received the parent companys blessing.

Emeka Obidike, executive secretary of the Lubricant Producers Association of Nigeria, described NNPCs venture as a welcome development, contending that it will help make the market more competitive. Obidike added that the move will help lend weight to a government campaign against the supply of substandard lubes into Nigeria. Local suppliers complain that these are mostly imported into the country.

If a state-owned oil company is coming to play on the local lubricant market, it will help open the eyes of the government to the challenges facing lubricant producers in the country, especially the campaign to discourage the import of finished lubes into Nigeria, said Obidike.

So if the NNPC eventually starts to blend, they can now join Lupan and [the Major Oil Marketers Association of Nigeria] to pressure the Nigerian government to protect local blenders because we have the requisite capacity to surpass local demands and extra for export to the sub-region, he said. The government will now be talking to themselves about discouraging the influx of imported finished lubes because most of these finished lubes are off-spec products, which makes the price cheaper than locally blended lubes. Hence, local blenders cannot compete with them.