The battle for dominance in Nigeria’s downstream oil sector has led to the closure of no fewer than 70 tank farms over the past two years, leaving many of these storage facilities abandoned as marketers and station owners shift to alternative supply methods.
These non-operational tank farms account for about 65 per cent of the 120 approved storage depots nationwide. Operators in the industry are increasingly bypassing these facilities, preferring direct trucking of petroleum products rather than storing them in tank farms.
Findings indicate that the primary reason behind the shutdown of these facilities is the removal of fuel subsidy by President Bola Tinubu’s administration. This policy shift, which came into effect on May 29, 2023, led to a sharp increase of 488 per cent in petrol prices, drastically reducing the purchasing power of fuel marketers and making storage costs less viable.
Tank farms serve as storage hubs for petroleum products, holding gasoline, crude oil, liquefied natural gas, heavy oil, and other chemicals before they are distributed to end users or other storage depots. Many of these storage facilities are strategically located in Lagos, particularly in Apapa, Ijegun, and Ojo, with a high concentration in Satellite Town, a densely populated area.
Before the removal of subsidies, these tank farms played a crucial role in ensuring energy security, as Nigeria depended heavily on fuel imports. The need to stockpile refined products for price stability encouraged marketers to invest in storage facilities. However, in 2024, data from the National Bureau of Statistics (NBS) showed that petrol import costs rose by 105.3 per cent, reaching N15.42tn, up from N7.51tn in 2023.
Residents of Ijegun and other host communities had previously raised concerns over the environmental and infrastructural impact of these tank farms, especially the absence of parking bays, which often led to road congestion and deteriorating infrastructure. Reports indicate that the proliferation of tank farms since 2012 negatively affected the quality of life in these areas, causing some residents to relocate.
According to Petroleumprice.ng, a platform that tracks real-time petrol prices and depot activities, only 50 out of 120 listed depots are currently operational. The Lagos region leads with 30 active depots, followed by Warri/Ogbara with 10, Port Harcourt/Onne with six, and Calabar with four functional depots.
Further analysis of Petroleumprice.ng’s 2025 data shows that key depots like NIPCO, AITEO, RAINOIL, and A.A. Rano dominate Lagos, while Matrix and AYM Shafa lead in Warri. In Port Harcourt, Bulk Strategic, SIGMUD, and Liquid Bulk are major players, while Sobaz and Mainland control operations in Calabar.
Oil and gas expert, Olatide Jeremiah, confirmed the declining functionality of tank farms across Nigeria. He attributed this trend to the removal of subsidies and full deregulation of the downstream sector, which began on May 29, 2023. According to him, this shift, coupled with the launch of the Dangote Refinery in October 2024 and the “naira for crude” policy, has given Dangote an overwhelming advantage over oil importers and tank farm owners. This has resulted in increased debts, with some operators shutting down, leasing, or even selling their storage facilities.
“Since Dangote Refinery started full operations, many depot owners are struggling because the refinery’s pricing structure gives it a competitive edge over importers. Some depots have shut down, some are on lease, while others are up for sale. Their capital base tripled, but profits dropped sharply,” Jeremiah explained.
He also pointed out that some depot owners are unhappy with Dangote Refinery’s gantry loading system, claiming it disrupts traditional distribution channels. “Many depot owners feel sidelined by Dangote’s loading model. His ship pricing strategy is another reason many depots don’t patronize him,” he added.
For a balanced industry, Jeremiah proposed that Dangote Refinery should focus on refining and selling fuel through ships to tank farm owners, who would then distribute products via trucks to retail outlets.
Similarly, Chinedu Ukadike, National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), blamed the crisis on attempts to control petrol pricing. He noted that many tank farm owners now struggle to source fuel, as the Nigerian National Petroleum Company Limited (NNPCL) no longer offers product allocations like before.
“The issue with tank farms is their source of supply. NNPCL used to allocate fuel to them, but now, with Dangote selling directly to retailers, many depot owners are trying to buy from him too. However, most of them lack the financial capacity to keep up, especially under the current market conditions,” Ukadike stated.
He added that many tank farms are unable to compete with Dangote’s gantry pricing, which makes direct retailing more attractive than bulk purchasing and storage.
