Based on shipping data and traders, Nigeria’s recently constructed Dangote oil refinery is taking market share away from European refiners by exporting more gasoil to West Africa.
As it waits for the restart of equipment required to produce cleaner fuels, the $20 billion refinery is reportedly producing a lesser grade of gasoil than expected, according to Reuters.
As a result, the refinery is looking for buyers in nearby markets.
According to statistics from analytics company Kpler, the refinery’s gasoil exports in May nearly doubled from April’s levels, coming in at close to 100,000 barrels per day (bpd). Except for one cargo to Spain, most of these shipments were intended for other West African nations.
Nonetheless, preliminary data for June indicates a notable decline in gasoil volumes, even while total oil product exports – which include jet fuel, naphtha, and fuel oil – stayed comparatively high at 225,000 barrels per day.
European exports to West Africa are declining
European markets have been impacted by “the refinery’s shifting of the balance in West Africa,” a European distillates trading source told Reuters.
According to Kpler data, Russian gasoil exports to West Africa sank to an eight-month low of 87,000 bpd in May, while EU and UK gasoil exports to the region fell to a four-year low of 29,000 bpd.
In Nigeria, Dangote has begun selling some high-sulfur petrol; nevertheless, there is a disagreement among local fuel dealers about who is in charge of selling the dirtier fuel.
50 parts per million (ppm) sulphur concentration was required by the Petroleum Industry Bill, passed in 2021, to comply with the sub-regional ECOWAS criteria established in 2020.
Nonetheless, the regulator gave local refineries and importers extra time to comply with the new requirement by allowing the sale of gasoil with a sulphur concentration exceeding 200 ppm from the start of the year until June.
Cargoes from the Dangote refinery have found buyers in areas with laxer motor fuel rules as European nations, particularly key hubs like Belgium and the Netherlands, tighten regulations on high-sulfur petrol oil exports.
Further Understanding
Aliko Dangote, the chairman of the Dangote refinery, had said earlier in May that once it is finished, the refinery will supply products to countries in West and Central Africa because Nigeria has too much capacity to use alone.
This drop in petrol oil shipments from Europe to West Africa supports earlier Reuters sources that said the refinery would even force some European refineries to close in addition to lowering the $17 billion in oil imports into the continent.
West Africa accounted for about one-third of the average daily petrol exports from the continent in 2023, making it the greatest regional importer of petrol from Europe (1.33 million barrels per day, or bpd).
