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). With the exception of one cargo to Spain, the majority of these shipments were intended for other West African nations.
However, preliminary data for June shows a significant drop in gasoil volumes, although overall oil product exports, including fuel oil, naphtha, and jet fuel, remained relatively high at 225,000 bpd.
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Decline in European exports to West Africa
“The refinery has shifted the balance in West Africa,” impacting European markets, a European distillates trading source told Reuters.
Kpler data revealed that EU and UK gasoil exports to West Africa fell to a four-year low of 29,000 bpd in May, while Russian exports to the region dropped to an eight-month low of 87,000 bpd in the same month.
Dangote has been selling some high-sulphur gasoil in the Nigerian market, but a dispute has arisen with local fuel retailers over who is responsible for selling the dirtier fuel.
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The Petroleum Industry Bill passed in 2021, mandated a sulphur content of 50 parts per million (ppm) to align with the sub-regional ECOWAS standards adopted in 2020.
However, the regulator permitted the sale of gasoil with sulphur content above 200 ppm locally from the beginning of the year until June, allowing local refineries and importers more time to comply with the new standard.
As European countries, including major hubs like Belgium and the Netherlands, tighten regulations on high-sulphur gasoil exports, cargoes from the Dangote refinery have found markets in regions with more lenient motor fuel standards
